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Chapter 7 vs. Chapter 13 Bankruptcy

There are several chapters in the United States Bankruptcy Code, but only two that are relevant to most individuals:  Chapter 7 and Chapter 13.  Although both of these chapters apply to individuals filing for personal bankruptcy, there are  important differences between them.  Chapter 7 is usually the preferable chapter of bankruptcy for individuals because debtors are able to discharge most of their debts, meaning those debts are not enforceable.  In addition, Chapter 7 bankruptcy, from start to finish, is faster and is over in 90 - 120 days.   Thereafter, you can start to rebuild your credit.    Which bankruptcy is best for your situation is why you should  consult with an experienced bankruptcy attorney.

Indiana Bankruptcy Attorney Explains Chapter 7 Bankruptcy  vs. Chapter 13 Bankruptcy

Contact the Bankruptcy Law Office of Steven P. Taylor, P.C.  Indianapolis:  (317) 271-1111 Kokomo: (765) 868-0807 for answers to your questions about which chapter of the Bankruptcy Code is right for you. Attorney Steven P. Taylor will advise you as to your options for filing bankruptcy under Chapter 7 vs. Chapter 13 bankruptcy.

Indiana Chapter 7  vs. Chapter 13 Bankruptcy Information Center

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Major Differences between Chapter 7 Bankruptcy and Chapter 13 Bankruptcy

In a Chapter 7 bankruptcy, all of the debtor’s non-exempt property may be sold by a bankruptcy trustee and the proceeds used to pay the debtor’s creditors. However, there are many property exemptions available to an individual debtor in Indiana. Consequently, most Chapter 7 cases are “no asset” cases and the debtor receives a discharge with creditors receiving nothing. A discharge means that the debtor is no longer obligated to pay back his or her debts. However, certain types of debts are not dischargeable in Chapter 7. Read more about nondischargeable debts in bankruptcy.

Generally, with some important exceptions, only property owned by the debtor at the time of the filing of the bankruptcy petition will be considered part of the debtor’s bankruptcy “estate” and, therefore, subject to being sold.

To be eligible to file under Chapter 7, debtors must meet certain income requirements. Read more about the Chapter 7 Means Test.

Chapter 13 bankruptcy is mostly used by debtors who own significant non-exempt assets; have too much income to file under Chapter 7; or debtors who have fallen behind on their mortgage payments. Under Chapter 13, the debtor repays some or all of his or her debts over a three to five year period. The debtor files a repayment plan with the court, which details which of the debtor’s creditors will be paid, and in what amounts. After a debtor has followed through with the terms of the repayment plan, most debts that remain will be discharged, although certain types of debts will not be discharged. Chapter 13 is only available to debtors who have regular income.

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Benefits of Filing under Chapter 7 Bankruptcy

Chapter 7 bankruptcy protects an individual or other entity  from the collection efforts of creditors.  Given the choice, many individuals prefer filing Chapter 7 bankruptcy because (1) it discharges most debt, (2) generally, the property acquired after filing  is not included in the bankruptcy estate, (3) no limit on the amount of debt that an individual may have (unlike Chapter 13 where an individual may be ineligible if secured or unsecured debt exceeds debt limits) and (4) normally, the discharge of debt occurs in as little as three months. 

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Benefits of Filing Chapter 13 Bankruptcy

Chapter 13 bankruptcy protects individuals and sole proprietorships from the collection efforts of creditors; permits individuals or sole proprietorships to keep their real estate and personal property by curing the arrears, restructuring the debt, or by just paying the fair market value of the collateral; and provides individuals the opportunity to repay their debts through reduced payments. 

You may be able to discharge debts in a Chapter 13 bankruptcy that would be non-dischargeable under other chapters, for example, marital property settlements.

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Resources in Indiana for Chapters 7 and 13

Chapter 7 of the United States Bankruptcy Code – Title 11 of the United States Code  contains the federal law regarding bankruptcy. The Code governs all bankruptcy cases in the United States. This link is directly to the laws pertaining to Chapter 7 bankruptcy.

Chapter 13 of the United States Bankruptcy Code – Title 11 of the United States Code  contains the federal law regarding bankruptcy. The Code governs all bankruptcy cases in the United States. This link is to the laws pertaining to Chapter 13 bankruptcy.

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Steven P. Taylor, P.C. | Indianapolis Chapter 7 and Chapter 13 Bankruptcy Lawyer  | Kokomo Chapter 7 and Chapter 13 Bankruptcy Lawyer

Contact the law firm of Steven P. Taylor, P.C. today for a free consultation about whether you should file for Chapter 7 or Chapter 13 bankruptcy in Indianapolis or Kokomo, Indiana. Steven P. Taylor will determine which chapter of bankruptcy is right for you. Call the Indianapolis Bankruptcy Office at (317) 271-1111 or the Kokomo Bankruptcy Office at  (765) 868-0807  if you are considering filing for bankruptcy in Indiana and would like to learn more about the process from an experienced Indianapolis * Kokomo bankruptcy attorney.

Get Trusted, Experienced Bankruptcy Counsel Today

Applying decades of experience, Steven Taylor will assess your financial situation and hear you out on your goals.  To discuss your immediate concerns and long-term financial challenges, request a free telephone consultation with Steven Taylor today.  He can help you find the best solution and take decisive action to regain your financial foothold.

                                Download Required Document Checklist and Budget Worksheet

Prior to your first meeting with my office, please complete the above downloads. They can provide me with further insight into your financial situation and allow me to determine if Chapter 7 vs. Chapter 13 bankruptcy is appropriate for you.

We are a debt relief agency. OUR DEBT RELIEF LAWYERS help people file for bankruptcy under the united States bankruptcy code. IF YOU NEED DEBT RELIEF, OUR LAWYERS ARE READY TO HELP.