For most once they decide to file bankruptcy the decision comes down to which Chapter they will be filing. Both chapters are beneficial in their own way. Many factors play into which chapter you will file. Your income and assets are the main considerations. Many prefer to qualify for Chapter 7 but may not qualify.
In Ohio a typical Chapter 7 bankruptcy lasts about six months from the day you file until you receive your discharge. Your actual court date which is call a 341 Meeting of Creditors will be four to six weeks out from your filing date. For Chapter 13 you will also have a 341 Meeting of Creditors about four to six weeks after your filing date. Once you file for Chapter 13 expect to be in the case for a period of three to five years as this time period is mandated by federal law. Once your complete your Chapter 13 you will receive your discharge.
PAY BACK OF DEBTS
In bankruptcy different debts are classified in basically two groups. Your unsecured debts (credit cards, medical debts, loans) and your secured debts (houses, cars, anything secured by collateral). There is also a sub-category of unsecured loans which are called priority debts, student loans and tax debts fall into this category. If you file for Chapter 7 you will be able to discharge all of your unsecured debts and not have to pay anything back. Most unsecured debts can be discharged, student loans and most taxes will survive the case. Any secure debts that you would want to keep (such as your home or vehicle) you would continue to make your payments on and sign a reaffirmation agreement within the case. Chapter 13 is a re-payment plan. Under this re-payment plan you will pay all of your debts with a single payment to the Chapter 13 Trustee once a month. Out of this payment the trustee may make your regular house payment. If you have any back payments on your home they would also make this payment for you. If there is a vehicle payment involved this will also be made by the trustee. You will pay back a percentage of your unsecured debts. This percentage is based on several factors and can range from 1 percent to 100 percent. The debts will be paid in order of priority. So basically in a Chapter 13 you have one payment a month to the Chapter 13 office and your utilities to pay during the duration of the case.
One big benefit of Chapter 13 is you will not have to worry about losing any of your assets in the case. You keep all of your assets that you wish to keep. In a Chapter 7 which is also referred to as a liquidation bankruptcy as the trustee may take some of your assets and liquidate them to gain funds to pay your creditors. Most people do not have to worry about this though because in Ohio the exemptions are very high and most assets can be protected.
As to your home if you want to qualify for a Chapter 7 you must be current on your mortgage payment to keep your home. If you file Chapter 7 and are not current on your home the lien holder will require that you get current or they may file for Relief from Stay which once granted they can begin the process of foreclosure. However, if you are current on your home Chapter 7 is no problem, just continue to make your payments and you may reaffirm the debt in the case is you wish.
Chapter 13 is designed to help you save your home if you are behind on your payments. Under Chapter 13 you will have the three to five year period to make up your missed payments through the case. The trustee will also make your regular house payment and at the end of the case the trustee will certify that all payments are current.
For more information check out our website at www.keegancolpa.com.
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