Deciding between Chapter 7 Bankruptcy and Chapter 13 Bankruptcy

A Chapter 13 bankruptcy is more effective than a Chapter 7. A Chapter 13 bankruptcy is better than a Chapter 7. After bankruptcy proceedings are over, you can still keep your property in California or anywhere else. A chapter 13 bankruptcy can be filed to clear the mortgage debts and reinstate your original agreement. A chapter 13 bankruptcy filing is a better option if you have valuable property that is not covered under your California bankruptcy exemptions. People file Chapter 13 bankruptcy when they are unable to file Chapter 7 bankruptcy due to too much income or because they have a type of debt that cannot be discharged in Chapter 7. Some taxes

California residents can use Chapter 7 to eliminate their debts and not have to repay them.

Learn more about these two types of bankruptcy:

  • California Chapter 7 Bankruptcy
  • California Chapter 13 Bankruptcy

Here is a quick overview of each type of bankruptcy.

  • California Chapter 7 Bankruptcy: Advantages
  • California Chapter 7 Bankruptcy Disadvantages
  • California Chapter 13 Bankruptcy: The Advantages
  • California Chapter 13 Bankruptcy: Disadvantages

Benefits of California Chapter 7 Filing

  1. It is possible to start over. After bankruptcy, you will be free from all debts.
  2. You have immediate protection against creditor collection efforts, wage garnishment, and wage garnishment as soon as you file.
  3. All your wages and all property (except inheritances) that you have acquired after filing bankruptcy are yours, and not the creditors and bankruptcy court.
  4. There is no minimum amount.
  5. Your case will be closed in 3 to 6 months.

California Chapter 7 Filings:

  1. The trustee will sell or lose any non-exempt property. Chapter 7 is not available if you wish to keep a secured asset such as a home or car that is not fully covered by the California bankruptcy exemptions.
  2. Chapter 7 grants temporary stay to homeowners facing foreclosure.
  3. Co-signors may remain with your debt if they don’t file for bankruptcy protection.
  4. If you have been granted a discharge in a prior case, Chapter 7 bankruptcy is not possible. This applies only to cases that were filed within the last eight years.

Benefits of the California Chapter 13 Payment Program:

  1. If you are able to afford the payment plan, your entire property can be kept exempt or non-exempt.
  2. While debts can’t be canceled in Chapter 7 bankruptcy, they are possible to be reduced by a Chapter 13 payment plan.
  3. Your rights are immediately protected from wage garnishment or creditor collection attempts.
  4. You can discharge more debts (including those incurred due to fraud or credit card charges for luxury goods immediately before filing).
  5. If they pay the full amount, any co-signers of Chapter 13 are exempted from creditors’ efforts.
  6. If you do not comply with your plan, your lender may foreclose your home.
  7. You have more time for debts that cannot be paid by either chapter (like taxes and back child support).
  8. You can file Chapter 13 at any time.
  9. Multiple filings are possible.
  10. You can separate your creditors according to their classes so that different creditors receive different amounts of payments. This will allow you to handle debts incurred by co-debtors on a different basis than those you incurred on your behalf.

California Chapter 13 Payment Plan Disadvantages

  1. You can use your post-bankruptcy earnings to pay a payment plan. This will tie up your cash during the Chapter 13 plan period.
  2. Due to the complexity of a Chapter 13 filing, legal fees can be higher.
  3. Your plan and therefore your debt will last between 3 and 5 years.
  4. You are involved in bankruptcy court proceedings for the duration of the plan
  5. Chapter 13 bankruptcy petitions are not possible for stockbrokers or commodity brokers.

This post was written by Trey Wright, one of the most sought after bankruptcy lawyers in Augusta Ga! Trey is one of the founding partners of Bruner Wright, P.A. Attorneys at Law, which specializes in areas related to bankruptcy law, estate planning, and business litigation.

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