Legal Help: Getting Hurt on the Street

Five Major Differences Between Chapter 7 And Chapter 13

If you've never filed for bankruptcy or known anyone who has been through the bankruptcy process, you might think that all bankruptcies are alike. However, nothing could be further from the truth. The two main types of consumer bankruptcy in the United States--Chapter 7 (liquidation bankruptcy) and Chapter 13 (repayment plan or reorganization bankruptcy)--have several notable differences. The types you choose depends on your financial situation, your assets and whether you have the means to gradually repay your creditors.

1. What property you get to keep

With Chapter 13 bankruptcy, you and the court agree to a plan that repays your creditors over a period of up to five years. With Chapter 7 bankruptcy, your assets are liquidated to repay your creditors (with some notable exceptions, such as most primary residences, one vehicle and a reasonable amount of personal possessions.)

2. Time to complete bankruptcy process

Chapter 7 bankruptcy takes between three and five months to complete, on average. Conversely, you'll be working with the bankruptcy court for up to five years when you file Chapter 13 bankruptcy.

3. Foreclosure protection

While all collection activities have to stop when you file bankruptcy, Chapter 7 provides no way for you to catch up on past or missed payments. Chapter 13, on the other hand, allows you to fold missed house payments into the repayment plan, so that you will be current with your mortgage again after you complete the bankruptcy plan.

4. Refiling restrictions

When you file Chapter 7 bankruptcy, you are prohibited from filing again for a number of years. (Each state's requirements are somewhat different.) However, when you file for Chapter 13 bankruptcy, you can usually file again in a matter of months.

5. Monthly payments

No monthly payment is due the court when you file for Chapter 7 bankruptcy. Conversely, under Chapter 13 bankruptcy, a monthly payment is due to a court-appointed bankruptcy trustee. Ninety percent of this payment goes to repay your creditors. The trustee is allowed to retain 10 percent as his fee. Miss these payments and your case will be dismissed and you'll lose the protection from collection activities.

Bankruptcy laws and filing requirements vary somewhat from state to state, but most are fairly complicated, no matter which type of bankruptcy you choose. You'll want to retain the services of a good bankruptcy attorney to make sure that you meet all of these requirements and to act as a liaison between you and the court during the bankruptcy process. Find out here about more information.

About Me

Legal Help: Getting Hurt on the Street

I never gave a lot of thought to needing a lawyer until I was injured while walking down a sidewalk. The accident happened when a biker decided to use the sidewalk instead of the street, and plowed into me as he turned a corner. What followed was a lesson in what is involved with pedestrian accidents. I found a traffic attorney who took my case, and she was able to obtain a settlement that covered the legal fees and my medical bills. If you have been injured through the negligence of another party, you do need legal representation. Keep reading and I'll share how I found the right lawyer and what we did to ensure that my rights were fully protected in a court of law.