Michigan Debt Relief Services Comparison of Bankruptcy types
In a few ways, the process in Bankruptcy Chapter 7 and Bankruptcy Chapter 13 are the same, but in numerous ways they differ. In both, you file a Voluntary Petition and associated documents devised with the assistance from an attorney. In both, you go to a 341 meeting of creditors where you’re examined by a Trustee concerning the Voluntary Petition and associated documents. That is where the similarities end.
In a Bankruptcy Chapter 7, you don’t give payments to the Trustee over time. Instead, you may sign assets over to the trustee in order to settle unpaid creditors. You could continue to pay off a mortgage or auto loan and keep the home or automobile by signing a “reaffirmation agreement” which makes it as though you didn’t file Bankruptcy on that specific loan. Chapter 7 also establishes a choice to pay off a vehicle, by paying the secured creditor the value of the collateral in exchange for a freeing by the creditor of their lien. The Chapter 7 process is comparatively short, lasting approximately 3.5 months from filing to discharge. There are commonly no motions filed by anybody in a Chapter 7 case. Nonetheless, the process is complicated, and there are a lot of pitfalls for the unguarded, so we urge you to employ an experienced attorney. If you have low income but a lot of unsecured credit card or medical debt, Chapter 7 is for you.
In a Bankruptcy Chapter 13, you do make payments to the Trustee, with the first payment due 30 days after your case is filed. Also, in addition to a Voluntary petition and related documents, you file a Chapter 13 repayment plan, proposing to repay your debts by making 36-60 monthly payments to the Trustee. After the 341 meeting of creditors, there is another hearing called a “confirmation hearing” where your case goes before the Judge. You do not have to attend the confirmation hearing, but your attorney will be there to represent you. Creditors can file objections to confirmation if they have a problem with the proposed Chapter 13 repayment plan. Your case will be confirmed by the Judge at the confirmation hearing if you are current with your Chapter 13 payments to the Trustee, any amendments requested by the Trustee have been filed, and any objections filed by your creditors have been resolved. After that, all you have to do is make all your monthly payments under the confirmed Chapter 13 repayment and you will receive your discharge. There are usually many motions filed by creditors, the Trustee, and by your attorney on your behalf during a Chapter 13 case. Chapter 13 is even more complicated than Chapter 7, so do not attempt to proceed without an experienced attorney. We have represented thousands of Chapter 13 clients, and are a fixture in the Bankruptcy courtrooms throughout the land.
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