subject: Procedure And Eligibility For Chapter 7 & 13 Bankruptcy [print this page] Chapter 7 and Chapter 13 Bankruptcy are the two most common types of bankruptcies filed by people. These bankruptcies are meant for individuals who have huge debts but still want to start a new phase of life with a clean credit report. In our everyday life, we find a lot of individuals trapped in the vicious circle of debt payment. The dominant reasons for this are easy availability of credit cards and loans. With a plethora of tempting ad campaigns that lead to an easy and quick purchase of a loan, the spending power of individuals has grown as compared to the past. This leads to a habit of spending more than what you have and soon people land up in a situation where their monthly expenditures are more than the total earnings. This sorry state is known as bankruptcy.
Bankruptcy Filing
A lot of discomfort and embarrassment is attached to filing bankruptcy along with social stigma. To add to this, a recent amendment of law has made bankruptcy filing tougher for people. But as we say, impossible is nothing, this task is also feasible but the procedure has become lengthier than before.
Chapter 7 bankruptcy
Chapter 7 bankruptcy is the commonest form of bankruptcy. Chapter 7 bankruptcy is also known as straight bankruptcy. The entire non-exempt property of the borrower is liquidated. The amount that is obtained from this is paid to the creditors. Certain assets are given exemption under chapter 7 bankruptcy i.e. home, car, and work tools. Exemptions vary with federal and new bankruptcy law.
Eligibility:
An individual who resides in the United States and has a property or business is eligible to file bankruptcy for chapter 7. Bankruptcy filing should not be done just to get out of debt. A bankruptcy is only valid if the borrower proves that he lacks sufficient funds for repaying the debt.
Procedure
How to file for bankruptcy under Chapter 7 intends to help citizens who have unintentionally landed themselves in a financial mess.
Several forms need to be filled out for giving out the information needed for the process. After this the court has to be attended. After this the person is discharged of all debts.
Chapter 13 Bankruptcy
Assets like house or other property are not covered by chapter 7 exemptions and this is why people resort to chapter 13 bankruptcy rules.
Eligibility
Debts of more than $750,000 should not be secured by an individual in the first place. Secondly, to be considered eligible unsecured debts of more than $250,000 should not be there.
Procedure
Firstly, a petition is to be filed in the court. The rest of the procedure depends on the court.
