Contacting a reputable Chicago bankruptcy lawyer is essential to be able to understand the difference between Chapter 7 and Chapter 13 bankruptcies for individuals. While only a bankruptcy attorney can advise as to which is the best choice for a particular situation, researching the two types can help individuals understand the risks and benefits. The biggest difference between the two is that chapter 13 requires the filer to repay debt but they are allowed to keep their assets like a home or vehicle.
Chapter 7 Bankruptcy
After filing for chapter 7 bankruptcy through your Chicago bankruptcy lawyer a person’s assets are liquidated to repay their debt. Any outstanding debt is erased and creditors are not allowed to come after the individual for repayment. Unfortunately, under chapter 7 law co-signers are held accountable for any outstanding debt. In addition, certain types of debt are not included in chapter 7 such as student loans, back child support, and taxes. Chapter 7 is ideal for Chicago individuals without debt attached to a co-signer, without a home to lose and without sufficient income to repay their existing debt.Bankruptcy attorneys in Chicago are the only ones with the experience to recommend chapter 7 bankruptcy.
Chapter 13 Bankruptcy in Chicago
Chapter 13 bankruptcy allows those in debt to restructure their payments and over the course of three to five years to repay their debt. The benefit to this type of bankruptcy is that co-signers are not held accountable for debt and assets are kept. In order to qualify a person must show sufficient income to repay their debt within five years with stringent budgeting. Before the restructuring begins, the filer must sit with a trustee and their creditors to determine a budget. The filer must adhere to that budget or the chapter 13 becomes a chapter 7 and their assets are liquidated. This is an ideal plan for anyone with regular income and assets they cannot afford to lose.
The Benefit Of Using A Chicago Bankruptcy Lawyer
After reading just a short paragraph about each type of bankruptcy it is completely normal to be confused. The typical bankruptcy filing includes upwards of sixty pages of forms that must be filed with various local, state, and federal agencies. These forms are complex and if not done correctly can slow down the bankruptcy process. After all the forms have been filed, creditors must be handled. Bankruptcy attorneys have years of experience helping Chicago residents negotiate with creditors and work hard for their clients’ best interests.
Bankruptcy law is complex and confusing even to those who practice it every day. Many are tempted to file for bankruptcy on their own but quickly find that they are in over their heads. Bankruptcy attorneys in Chicago specialize in both federal and state law in regards to bankruptcy and have experience dealing with creditors.