The economic crises in recent years have thrown up a plethora of bankruptcy issues that need to be addressed in a clear headed manner. It is a time of great insecurity and fear when suddenly your seemingly well laid financial goals start crumbling and you are faced with unmanageable debt. When you are confused it is a good idea to get in touch with a good bankruptcy lawyer to see you through the crises.
Which chapter is best suited to your financial needs?
Chapter 7 vs chapter 13 is the commonest dilemma that an individual faces when he is contemplating filing for bankruptcy. The former is liquidation based bankruptcy whereas the latter is a restructuring type of bankruptcy.
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- Liquidation is best when you have little or no assets, while restructuring works best if you have a large asset base that you want to protect.
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- Liquidation is a better option if you are not being able to garner basic living expenses, while reorganization is a better option for people with enough income to live comfortably but not enough to repay debts.
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- Liquidation may free you of your debt burden in a short time as the unsecured debts are foreclosed. Whereas restructuring may shorten your interest burden and stretch out your repayment over 3-5 years while keeping the principal repayment untouched.
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- In both cases you are spared direct contact with your creditors for the tenure of the discharge. There is a stay from threatening calls and letters.
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- In a liquidation type of bankruptcy petition the pre-filing norms must be adhered to and the ‘Means test” is the primary qualifier for the petition to be accepted. The petitioner has to prove that he has no means to sustain his livelihood. On the other hand to file for the restructuring bankruptcy the petitioner has to prove that his unsecured debt burden is below $360,475 and his secure debt amount is less than $1,081,400 to qualify.
- You cannot appeal for a second liquidation bankruptcy before a gap of 8 yeas from the first petition. Where as in the case of a restructured bankruptcy the petition can be filed as many times as required at any interval.
Your confusion can be cleared with professional help
It is very natural to get confused with the various options available to you. It is best to seek professional help as the petition is critical. If made properly it might get you a good deal and save your property from getting attached or liquidated. A seasoned negotiator may also be able to get you a good deal when you restructure your existing debts and save you a lot of money in the process. The legal cost is worth every single penny.
