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CHAPTER 7:

Referred to as personal bankruptcy, although businesses can also file under Chapter 7. Under any Chapter, you are required to list all of your assets and all of your debts on your petition.

An asset is anything you own or may have a right to own at some future date.

Depending on how you file your case, a Trustee could liquidate (sell) all of your non-exempt assets and pay your creditors according to the priority afforded to them by the Bankruptcy Code.

The amount your creditors will get is fixed by the value of your non-exempt assets. Certain debts can not be discharged. Examples of these are alimony, child support obligations, some kinds of taxes and student loans.

Chapter 13 vs. Chapter 7 - One purpose of a chapter 13, as opposed to a chapter 7, is to enable a debtor to retain certain assets (for example, your home) which might otherwise be liquidated by a chapter 7 Trustee.

What are the benefits of Chapter 13? It protects individuals from the collection efforts of creditors and allows individuals to keep their real estate and personal property. It also provides individuals the opportunity to repay their debts through reduced payments.

You may be able to discharge debts in a Chapter 13 that would not be discharged under other chapters.

How does Chapter 13 work and how long does it last?

You must have some source of income, this could be a job or even a pledge from an individual that is regular. You are usually required to pay all of your disposable income to the Trustee for up to 60 months.

Your disposable income is defined as income you receive that is not reasonably necessary for the maintenance and support of you or your dependents.

• There is a "means test" involved which is a requirement.
• You will have to take two short classes either by phone, on-line or in person regarding credit.