Two Very Different Types of Bankruptcy Protection
The U.S. Bankruptcy Code provides different types of relief for individuals, couples and businesses facing different financial challenges. The vast majority of individuals and married couples filing for bankruptcy protection file under Chapter 7, but Chapter 13 bankruptcy is also a common solution for consumers who find themselves in financial trouble.
The short descriptions below will give you a general overview of each type of consumer bankruptcy. To learn more, click through to read about a specific type of bankruptcy or schedule a free consultation.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is designed to eliminated certain types of debt. Some of the most common debts wiped out in a successful Chapter 7 case include:
- Credit card debt
- Medical bills
- Payday loans
- Unsecured personal loans
- Past-due utility bills
Not everyone is eligible to file for Chapter 7 bankruptcy, but most people who earn below the median income in their states will qualify. Many of those with higher income qualify as well. When debt is discharged in a Chapter 7 case, the petitioner is no longer legally obligated to pay, and creditors who pursue payment may face sanctions.
Learn more about Chapter 7 bankruptcy
Chapter 13 Bankruptcy
Chapter 13 bankruptcy helps people who have regular income get caught up when their debts are out of control. A combination of a repayment plan lasting three to five years and a partial discharge of some unsecured debts gives people with past-due secured debt such as mortgages and car loans the opportunity to get back on track without late fees, large interest charges and the stress of constant collection calls.
Get more information about Chapter 13 bankruptcy