When you are filing for Chapter 7 bankruptcy, the court will eliminate the majority of your unsecured debts that will include personal loans, credit card bills, or medical bills. In the majority of the cases, the debtors don’t have the assets over the benchmark set by the state and federal regulations. Hence, the assets cannot be distributed among the creditors. This process takes 3 to 4 months. And after the discharge, the debtor owes no one.
For chapter 13, the repayment plan can last for 3 to 5 years. You need to consult a Pittsburgh bankruptcy lawyer who can help you choose the right type of bankruptcy. While chapter 7 bankruptcy can help you in many ways and is cost and time effective, chapter 13 can offer some other advantages too. Hence, you need to know when you should go for chapter 13 instead of chapter 7.Not Qualified for Chapter 7 Bankruptcy
Before the Bankruptcy Protection Act in 2005, there were no hard and fast criteria for filing for Chapter 7 bankruptcy. The U. S. Trustee had enough discretion for deciding or objecting to a chapter 7 bankruptcy. But since Bankruptcy Protection Act 2005 introduced Means Test, there are certain objective standards that the debtor needs to meet in order to file for chapter 7 bankruptcy. The Means Test will exclude only the incomes like Social Security Retirement, Social Security Disability, and Supplement Security Income. Therefore, qualifying for chapter 7 bankruptcy has become tough for many debtors.
Also, if the debtor has filed a chapter 7 bankruptcy, then for the next 8 years, they cannot file for the same chapter. They have to go for chapters 11 or 13.
Also, if you have property over the exemptions of state and federal standards, then that will need to be liquidating when you are filing for Chapter 7 bankruptcy. But if you are going for chapter 13, you can retain your properties and assets. You will get a repayment plan from the trustee that you will need to follow. Even though the process might last for 3 to 5 years, you will have to pay way less money than what you owed to the creditors. This is the biggest reason why our Pittsburgh bankruptcy lawyer suggests you go for chapter 13.Protection of Your Co-debtor
When you individually file chapter 7 bankruptcy, you will be saved but your co-debtor will be pursued for the payment. But filing for chapter 13 will protect you all from being hounded by the creditors.In Case of Mortgage Arrears, Tax Arrears, and Non-Dischargeable Debts
When you are filing for Chapter 13 bankruptcy, you get to pay the mortgage arrears, tax arrears, and non-dischargeable debts within a span of 60 months. You don’t have to pay the lump sum amount. You can pay it quite conveniently while continuing with the other necessities of life. This is the perfect plan for those who are suffering from illness, hospitalization, or job loss. You can also pay for tax, domestic support, and other non-dischargeable debts.Mortgage Stripdowns for Chapter 13
Stripdown is a unique concept for chapter 13 bankruptcy. This provision helps the debtor eliminate the unsecured second mortgage of their homes. If you file chapter 7, you won’t get a chance to eliminate this. In order to qualify for the stripdown, the value of the house should be more than the first mortgage so that there is no equity left for supporting your second mortgage. You will need an appraisal that will show the fair market value of your property and how that exceeds the first mortgage.Automobile Financing and Investment Property for Chapter 13 Bankruptcy
If you have fallen behind the payment of your car loan and you want to retain the vehicle, you will need to file for chapter 13. This way you can get a repayment plan for paying the loan in 60 months. Also, if you owe more than what the price of the vehicle is, then the adjustment can be made with the principal amount. This process is known as cram-down. To qualify for this, you need to purchase the car at least 910 days before filing for bankruptcy.
Similar arrangements can be made for the investment properties too.
For further discussions on these aspects, you should connect with our Pittsburgh bankruptcy lawyer. We, Pittsburgh Bankruptcy Law Group are here to help you.