If you are considering bankruptcy, then you have most likely heard of Chapter 7 Bankruptcy and Chapter 13 Bankruptcy. But, you may not understand the differences between the two. Both of these bankruptcy chapters are used by all kinds of people, single or married, small business owners, and those working for corporations. All of them have the same thing in common: They struggle with overwhelming debt. If you are trying to decide whether or not to file for bankruptcy in Littleton, Centennial or Aurora, it is important that you understand the differences between Chapter 7 and Chapter 13 bankruptcy.
Chapter 7 Bankruptcy in Littleton, Centennial and Aurora: “Liquidation Bankruptcy”
Chapter 7 bankruptcy is the most common form of bankruptcy, and is often called “liquidation bankruptcy.” This is because you won’t be on any type of plan to repay the debt that is discharged. You will be able to keep most of your property (this is called exempt assets or property). The rest of your possessions (those that are non-exempt), will be sold by the bankruptcy trustee. The money that is made from their sale will go to your creditors. In Colorado, bankruptcy exemptions protect most of what you own – you will most likely keep the majority of your belongings.
If you file for Chapter 7 Bankruptcy, you will be able to discharge many kinds of debt: Credit card debt, personal loans, medical debt, and other unsecured debt. You will also remove your liability for secured debts (such as your car loans or mortgage) with the forfeiture of secured assets. When you file for Chapter 7 in Littleton, Centennial and Aurora, your debts will be discharged quickly. Often, you will get relief within 4-6 months after you file.
Do I Qualify for Chapter 7 Bankruptcy?
Your gross household income determines whether or not you qualify for Chapter 7 bankruptcy in Littleton, Aurora or Centennial. If you are below the median income (based on household size) for the state of Colorado, then you will be able to file Chapter 7. Read more about whether or not you qualify for a Chapter 7 Bankruptcy.
Chapter 13 Bankruptcy in Littleton, Aurora and Centennial
Chapter 13 discharges the same debts as in Chapter 7 – but it is filed by people whose income is too high to file for Chapter 7. It also offers a few more advantages. Chapter 13 Bankruptcy in Littleton, Centennial and Aurora can remove more debt than is possible when filing Chapter 7 (such as Property Settlement Awards that occur after a divorce, and the manipulation of certain secured debts such as mortgages and car loans).
When you file for Chapter 13 bankruptcy, you will be put on a monthly payment plan that will last from 3-5 years. The monthly payment will be determined by your expenses and income (using the means test), or by the reason you are filing (in order to make up missed mortgage payments or to repay tax debt). Once you have made all your payments, your debts are discharged. With Chapter 13, most people will pay only a fraction of their debt, and will be protected from debt collection while they make their payments.
Do I Qualify for Chapter 13 Bankruptcy in Aurora, Centennial and Littleton?
Chapter 13 is a good option for people whose income is too high to file Chapter 7 Bankruptcy. The monthly payment amount is determined by your monthly income using a means test. The means test can be quite complicated – you need to work with an experienced bankruptcy attorney such as Barry Arrington in order to get the best results. Read more about whether or not you qualify for a Chapter 13 Bankruptcy. Bankruptcy code is complicated and confusing – don’t try to figure it out on your own. Work with an experienced attorney who has a thorough understanding of exemptions!
We hope we have answered your questions about the difference between Chapter 7 bankruptcy and Chapter 13 bankruptcy in Arapahoe County. Call now to request your free initial consultation with Barry Arrington, an experienced, trustworthy and understanding bankruptcy lawyer at 303-205-7870 or submit the “Get Help Now” form to begin your journey towards financial freedom.