A Chapter 7 bankruptcy will usually eliminate all of a debtor’s unsecured debts – things like credit card debts or personal loan debts. In Chapter 13 bankruptcy cases, debtors are required to pay all of their excess income each month into a pool that is split up by their creditors. After three to five years, whatever unsecured debts remain are discharged in a Chapter 13 bankruptcy case.
Chapter 7 bankruptcy is not designed to save property where payments have not been made and foreclosure has begun. However, Chapter 13 bankruptcy can help in that exact situation.
The job of the Chapter 7 Bankruptcy Trustee is to seize any non-exempt property and divide up those proceeds among creditors. There are many state and federal exemptions that usually protect the majority of household items and often a home or first car from seizure. Debtors with boats, motor homes, second houses or other property subject to seizure may prefer a Chapter 13 bankruptcy to protect their property from being seized.
Interested in learning more about or filing Chapter 7 bankruptcy? Call us today.