Bankruptcy Law-Difference Between a Chapter 13 and a Chapter 7 Bakruptcy

by Meagan Kania on April 18, 2012

Chapter 7 or Chapter 13 Bankruptcy in Ok-

Whats The Bankruptcy Attorney Tulsa-Differnt Chapters Of BankruptcyDifference Between Them:

The major difference between a chapter 13 and a chapter 7 bankruptcy is that a chapter 13 is more like a reorganization of both secured and unsecured debt where as a chapter 7 bankruptcy is a liquidation of all debts and nonexempt assets.

 In a chapter 13 the debtor is required to repay the debts to the creditors over a period of 3 to 5 years.  The repayment amount that is required is percentage of the original debt and that amount is determined by your disposable income left after you pay your living expenses.  The payment is made through a payroll intercept from your paycheck that is paid over to the chapter 13 bankruptcy trustee in your case.  The trustee then takes the money and pays off your creditors per the percentage of the debt that you will be required to pay off in your bankruptcy plan. To qualify for a chapter 13 you must be working and show the U.S. trustee in you case that based on your income there is a high probability that you will be able to complete the plan.  This is called getting your chapter 13 bankruptcy plane confirmed and approved by the Bankruptcy Court.

In a chapter 7 bankruptcy most if not all of the debt is discharged when the case closes and that is usually within a few months after you file your case.  The chapter 7 is more like a liquidation which means that all of the debt that is not secured by collateral is wiped clean and forgiven.  If the debt is secured by collateral you will be required to reaffirm the debt and continue to make payments or loose the collateral. In a chapter 7 if the asset is paid off and it is not an exempt asset under Oklahoma Bankruptcy Exemptions you may lose it in the chapter 7.  An example of an exempt asset that you can keep in a chapter 7 bankruptcy is your home and car as well as 401 K retirement plans. An asset that is not exempt may be a secnd home different from your primary residence.

The main reasons you decide on a chapter 13 over a chapter 7 is that to file a chapter 7 your family income must be under the median family income if not you dont qualify.  If it is over the median family income then you make to much money and must choose a chapter 13.  Another reason is that maybe you are behind on your home mortgage and are facing a foreclosure. If this the case the filing of the chapter 13 will stop the foreclosure and allow you to make up the mortgage arrearage through the chapter 13 bankruptcy plane. Still another reason may be that its been less than 8 years since you filed a chapter 7 and if this is the case than again you must file the chapter 13.

For a Free Bankruptcy consultation with a Bankruptcy attorney in Tulsa just call or send me an email,

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