Personal Bankruptcy: Should I Choose Chapter 7 or Chapter 13?

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An individual or a married couple can look to Chapter 7 Bankruptcy in Los Angeles or Chapter 13 forms of bankruptcy to find relief from needlessly paying debt beyond their means.

It is not true that a person loses everything in return for erasing debt through straight bankruptcy or Chapter 7. Neither should anyone give-up most of their future income to hold-on to all their property through a payment plan under Chapter 13. The process is clarified while avoiding expensive mistakes by choosing a specialist Bankruptcy Attorney Long Beach.

Chapter 7 discharges debt by giving creditors the proceeds from selling of a person's or couple's non-exempt assets. These should not include homes, cars, jewelry, or even tax refunds owed to someone filing for bankruptcy if proven exempt under certain laws. Exemptions are possible in a majority of cases, and is central to the strategies of an experienced bankruptcy lawyer.

Protecting assets under Chapter 7 begins before a person files for bankruptcy. Debtors need to prove their eligibility for Chapter 7 through a "means test" based on income. It's essential to be advised by a competent bankruptcy lawyer before this critical step: only eligible debtors receive an automatic stay on creditors' attempts to collect or repossess by actually filing.

Debtors not eligible to file under Chapter 7, or those wishing to avoid the risk of giving-up assets, can seek protection under Chapter 13. For a person with a regular source of income, a debt management plan is proposed where they can be discharged from their debts by making payments for three or five years.

Payments are made only from disposable income after allowing for necessities, and do not involve surrendering property. Chapter 13 is a more flexible option for many debtors, especially with a realistic payment plan. There remains the option of converting it to Chapter 7 if plan payments become too burdensome, or a debtor loses a job.

Whichever option a person chooses, a legal strategy based on up-to-date knowledge about new legislation and court decisions related to bankruptcy is essential to avoid unnecessary sacrifice. A person could end-up paying without needing to for want of the right expertise.

Wadhwani & Shanfeld has experienced bankruptcy attorneys available to take the complexity out of bankruptcies. Please visit their Los Angeles offices to meet a specialist, or call for same-day phone consultation. Their experts will leave you informed of all your options about Chapter 7 and Chapter 13 forms of bankruptcy.