Chapter 13 Bankruptcy

Chapter 13 or Reorganization bankruptcy is a discrete type of bankruptcy. Chapter 13 bankruptcy involves promising a portion of your income for several years - in return that your property is not seized. While chapter 7 involves giving up property in exchange for the removal of debts.

Chapter 13 bankruptcy may be a good idea if you know you can generate the income to payback debt. You must prove to the bankruptcy court that you have the ability to payback over time. Irregular income will not cut it, and you will have to get a Denver bankruptcy lawyer to work on your behalf, further compounding your expenses.

To file for chapter 13 bankruptcy, your Denver bankruptcy attorney will explain the difference between secured and unsecured debts. Secured debts are ones that have a specific collateral property the creditor may seize to back up the debt. These may not exceed one million dollars, while unsecured debt that has no backing must not exceed a quarter million.

You know all those commercials about credit counselling? That is for chapter 13. It is like the defensive driving of bankruptcy. Before filing you must go through credit counselling by an approved agency. Bankruptcy lawyers have tons of jokes about these con-sellers.

To get the bankruptcy approved you must show how and when you will repay your debts. The plan has no specific structure, but it must describe in detail the amounts and parts of the plan.

Priority debts, or debts that must be paid in full, are things like taxes and legal payments, child support and owed wages. First all secured debt payments must start. After repaying all secured debts, all additional income must go to paying unsecured debts. Unsecured debts are only repaid if you have enough after the secure debt payments. Payment must continue during your plan except in cases of hardship. The plan is 3 years for those who make below median income in the state, and 5 years for those who make more. Once you have repaid your debts, any other eligible debts will be deleted.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy is the oldest and most common form of bankruptcy. It involves liquidating some of your property in return for absolving some debts. The chapter just refers to a chapter of united states code. In terms of court costs, chapter 7 is cheap, with only a filing fee and one visit to the courthouse. Like other forms of bankruptcy, chapter 7 requires credit counseling before moving forward. Those who have the earnings ability to complete a chapter 13 will not be eligible, as well as those who already filed for bankruptcy recently.

In order to properly file, you must fill out a petition and forms that describe your property, expenses, debts, and everything you owned, sold, spent or gave away during the last 2 years. Then you will fill out what property you think should be exempt from seizure. This is an important part of Denver bankruptcy that cannot be forgotten, or your claim will be thrown out.

Once filed, the order for relief acts as an automatic stop to debt collectors from garnishing wages or taking your money or property. The court now technically owns your property for the time being. You cannot sell your property without the court's permission unless you have a Denver bankruptcy attorney find a loophole. Property acquired after the filing is not controlled by the court. To enforce its decisions and recover the maximum amount from you, the court appoints a bankruptcy trustee to look for additional property or reversible transactions. Usually the trusty will find nothing additional if you have a quality Denver bankruptcy lawyer backing you up.

There will then be a creditor's meeting where you may be asked questions by the trustee or creditors. The may have to pay for or sell new nonexempt property. Nonexempt but worthless property usually results in an abandonment of claim by the trustee for that property. Secured debts may not have the collateral seized if you are still making payments on the trust. Once this process is over, all debts are cleared except for government regulated debts.