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Chapter 7
Bankruptcy (Straight Bankruptcy or
Liquidation)
Filing for bankruptcy is
not a pleasant process and should be
considered your last resort. Please be
aware that your credit profile will be
affected for 10 years. In a
Chapter 7 bankruptcy, you must disclose all
of your debts and all of your assets. Once
filed, a Chapter 7 Trustee is assigned to
your case to liquidate your assets to pay
your creditors. You may claim certain
property as exempt from seizure under
governing law. The purpose of filing Chapter
7 is to obtain discharge of your existing
debts; however some debts are not
dischargeable under the law. Chapter 7
is basically used to discharge (forgive)
unsecured debt; credit cards, unsecured
loans, deficiency balances on repossessed
automobiles, medical debts, etc. Expect to
pay a much higher interest rate for
mortgages, car loans, and insurance once you
file for Chapter 7 bankruptcy.
Chapter 13
Bankruptcy (Reorganization)
A Chapter 13 is
designed for someone with a regular income
who is unable to pay their debts but would
like to pay them in installments over a
period of time. You set up a plan with the
court to pay your creditors a portion of the
money you owe them using your future income.
The court must approve your plan before the
process begins. Please note that you
will be paying interest as well on this
money. Therefore, you will be paying
more with this option over the long term,
and your credit will be negatively affected.
By choosing Chapter 13 you may be able to
keep your property, unlike Chapter 7
bankruptcy, as long as you continue to make
payments. We do not recommend this
option if you can meet the requirements for
debt settlement. When you sign up for
our online program we will show you the
different approaches you can take to get out
of debt.
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