Chapter 7 vs Chapter 13
Most experienced attorneys can prepare a simple Chapter 7 but few can prepare a Chapter 13 proceeding. Be careful because in many cases a Chapter 13 is far more beneficial for you than a Chapter 7 but some attorneys (who can't do Chapter 13) will only advise that you do Chapter 7. This may result in loss of your house, inability to eliminate large amounts of second mortgage debt (only available in Chapter 13), and loss of business or other assets.
Inability to prepare a Chapter 13 and therefore putting clients in a simple Chapter 7 can be considered malpractice and can be extremely damaging to the client. ASK HOUR ATTORNEY IF HE OR SHE CAN DO CHAPTER 13 AND HOW MANY HAVE BEEN DONE! ASK YOUR ATTORNEY TO CLEARY EXPLAIN THE DIFFERENCES SO THAT YOU FEEL COMFORTABLE YOUI ARE GETTING INTO THE RIGHT CHAPTER.
Chapter 7 is the simple basic bankruptcy used for eliminating unsecured credit card debt, or eliminating real estate debt to be surrendered. In addition, certain taxes, medical bills, lawsuits, judgments, and repossessions can be eliminated. REMEMBER YOU HAVE TO QUALIFY UNDER THE MEANS TEST and provide other evidence to the court.
Chapter 13 is the more sophisticated proceeding which allows you to repay what you can afford regardless of how much you owe. In many Chapter 13's you can eliminate more debt than in a Chapter 7! Chapter 13 is used to help keep houses by eliminating second mortgages (lien strips), and restructuring delinquent first mortgage debt. You will have 5 years to bring yourself current on back house payments! It is also appropriate for small businesses to trim off secured, unsecured, and tax debt. Remember the GMAC bankruptcy? This was Chapter 11, similar to Chapter 13, and allowed GMAC, and many other businesses to become profitable. Chapter 13's are also used to stop interest and penalties on tax obligations with up to five years to repay those taxes which cannot be eliminated. Autos and other vehicles can also be paid at lower payments at 5% interest.
With today's economy Chapter 13's have become the more creative Chapter saving homes, businesses and eliminating more debt than in Chapter 7. Compare these Chapters with me at a free consultation before deciding.