What is the difference between Chapter 7 and Chapter 13 bankruptcy?
- Chapter 7 bankruptcy releases the debtor from personal liability for certain debts. A discharge prevents creditors from seeking payment for debts that have been discharged by the court. Chapter 7 bankruptcy requires the debtor to satisfy debts by selling certain non-exempt property.
- Through a Chapter 13 bankruptcy the debtor files a plan with the court outlining how the debtor intends to pay off his or her debts within a period of time. Chapter 13 allows the debtor to retain certain property as opposed to the forced sale required under Chapter 7.
How do I file for bankruptcy?
- A bankruptcy proceeding begins with the filing of certain forms and supplemental documents with the bankruptcy court. The required materials vary depending on the type of bankruptcy.
How much does bankruptcy cost?
- The Bankruptcy Court charges a filing fee. That fee is $200.00 for a Chapter 7 and $185.00 for a Chapter 13. The fee must be paid within a reasonable time after filing.
- Bankruptcy attorneys charge $150-400 per hour and a substantial retainer to begin. The total cost varies on the complexity of the case.
What property can I keep?
- In Chapter 7 bankruptcy, non-exempt property is sold to pay bank creditors. You may make arrangements with the trustee to buy bank your property so long as the outstanding debts are repaid.
- In Chapter 13, you can keep ALL property. Creditors are repaid through the Chapter 13 plan.
Will I have to go to court?
- Most cases require only a meeting with creditors where you will be required to answer questions relevant to the bankruptcy.
How will bankruptcy affect my credit score?
- Evidence of a bankruptcy remains on your credit score for 10 years, frustrating your ability to acquire loans at low rates. Lending institutions charge higher rates because of the increase risk of non-payment.
Should I hire an attorney?
- An experienced bankruptcy attorney can protect certain property rights and generally will leave you in a better financial position upon completion of your case.
- Free or discounted representation may be available through legal aid organizations.