What surprises many people is that there are different types of bankruptcies that a person or business can file for. However, for individuals, the two main types of bankruptcies are chapter 7 and chapter 13. Chapter 13 is known as the wage earners bankruptcy, and it is for people whose income exceeds the limits for filing chapter 7 bankruptcy. This makes a bankruptcy of this type different in terms of how it works. In these situations, chapter 13 attorneys in Fall River, MA can prove of great help to an individual or couple so they can understand what this type of bankruptcy involves.
Typically, the determination as to what type of bankruptcy people qualify for is done through a means test. If the person has more assets, and if they earn higher wages, they will need to file for chapter 13 bankruptcy. While chapter 7 bankruptcy helps eliminate debt, chapter 13 is, in essence, a court-ordered repayment plan. This repayment plan lasts anywhere from 3 to 5 years, and it’s a time in which the bankruptcy filer is required to pay either the full amount of their debt or a portion of their debt.
As chapter 13 attorneys in Fall River, MA will typically explain, payments are made to a trustee that is appointed by the courts. This trustee takes these payments and repays creditors. The great thing is that once the trustee has been set up, the debtor can communicate with the trustee if the payment plan becomes too arduous and unaffordable. Many times, the trustee can exercise a certain amount of flexibility in restructuring payment amounts or allowing the repayment plan to go longer than five years.
Many people are concerned about bankruptcies being on their credit scores for 7 to 10 years. While this is true, the likelihood is that credit card bills and potential foreclosures that a person could be facing can be even more harmful than having a discharged bankruptcy on a credit report for an extended period of time.
There are many questions people have about chapter 13 and chapter 7 bankruptcies in general. For that reason, it’s a good idea to contact the law offices of Tara M. George, PC to learn more. By scheduling a consultation appointment, you can learn more about the bankruptcy process and determine if this option is right for you.