The Language of Bankruptcy
If the language of bankruptcy is confusing to you, you’re not alone. Information about bankruptcy tends to assume that you know what terms like “Chapter 7” and “Chapter 13” mean. In the greater Chicago area, if you struggle with debts and you are considering bankruptcy, learn what you need to know by speaking promptly with an experienced Chicago bankruptcy lawyer. “Chapter 7” and “Chapter 13” both refer to chapters in “Title 11” of the United States Code, the complete federal laws of the United States. The United States Code currently includes 52 titles. Title 11 is known as the U.S. Bankruptcy Code, the source of bankruptcy law in the United States. Chapter 7 and Chapter 13 are the chapters of Title 11 that govern personal bankruptcies.
A Chapter 7 bankruptcy and a Chapter 13 bankruptcy are quite different kinds of procedures. A Chapter 7 bankruptcy will be right for some people who are in debt, but a Chapter 13 bankruptcy will be more appropriate for others. You need to know the differences before you file. An experienced Chicago bankruptcy lawyer can help. Chapter 13 and Chapter 7 bankruptcies are both for those with more personal debt than they can realistically pay. A Chapter 7 bankruptcy discharges your unsecured debt, but you must pass a means test to qualify. No test is required to file a Chapter 13 bankruptcy, but you’ll have to pay off your unsecured debt over three to five years.
When you file for a Chapter 7 bankruptcy, a trustee determines which parts of your property are exempt – that is, what property you can keep – and the rest of your possessions are liquidated to pay your debts. Any unpayable unsecured debts are discharged. When you file for a Chapter 13 bankruptcy, you and your trustee create a repayment plan. You do not lose property with a Chapter 13 bankruptcy, but the process is much slower, and you still eventually must pay your debts. Filing for bankruptcy is a choice that cannot be made in haste. It must be a fully-informed choice made with the help of an experienced Chicago bankruptcy lawyer. If you are facing overwhelming personal debt and considering bankruptcy, make the call immediately.