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Luckily, Bankruptcy Utah is here to help you understand the difference between the two chapters and at the same time, help you with the filing process. This bankruptcy attorney in Utah offers a free consultation to people who would want to know more about bankruptcy and other related topics.
If you think this is an opportunity that can make you understand Chapter 7 bankruptcy in Utah even more, you can drop by their office at 6000 South Fashion Blvd. in Murray, Utah. You can also give them a call at (801) 560-1843 to set up a personal appointment with one of their legal attorney experts.
Everyone wants to have a great start on their career and also to have good marks when it comes to their credit rating. However, not everything will happen according to plan. Bad business judgments, excessive spending and more can not only harm your credit score but also your financial standing. Unfortunately, others find it hard to recover and the only option left for them to do is to file for bankruptcy. Since this is quite a taboo subject, not a lot of people know what to do when the time comes when you need to file a Chapter 7 or 13.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is known as the “fresh start” bankruptcy because essentially that’s what you get…a fresh start. All of your dischargeable debts are discharged. Discharged in a bankruptcy term that simply means removed or erased. However, Chapter 7 bankruptcy is also known as a “liquidation” bankruptcy. This is because when you file a Chapter 7 bankruptcy all of your assets (with certain exceptions known as “exemptions”) become property of the bankruptcy estate and may be taken and sold by the Chapter 7 Trustee. A Chapter 7 bankruptcy will not save your house. If you are behind on your mortgage payments and the mortgage company is foreclosing, a Chapter 7 may stall the foreclosure for a short time, but not very long. Additionally, if you make more than the average income for a family your size in the state where you live, you may not be eligible to file a Chapter 7. For these reasons and others, Chapter 7 is not always the best option.
Chapter 13 Bankruptcy
Chapter 13 is know as a reorganization bankruptcy. A common misconception with Chapter 13 is that you pay back all of your debt. This is NOT true. In fact, in some instances you will pay less to creditors in a Chapter 13 than you would in a Chapter 7. In a Chapter 13 you make a monthly payment to the Chapter 13 Trustee for at least 36 months and not more than 60 months. Chapter 13 bankruptcies protect your home from foreclosure. In a Chapter 13 your mortgage delinquency is factored into your monthly payment to the Trustee. You remain responsible to make the ongoing mortgage payments starting with the first payment due after the petition date (the day you file your bankruptcy).
However, all the mortgage payments that were due prior to the petition date are included in your bankruptcy and part of your Chapter 13 bankruptcy payment is paid by the Chapter 13 Trustee to your mortgage company. Chapter 13 bankruptcies also allow you to pay tax debt over 36 to 60 months without accruing interest on any unsecured tax debt. In a Chapter 13 the trustee does not take things from you. Payment to your creditors is based on the monthly payment you make to the trustee. In many cases a Chapter 13 allows you to reduce the interest rate paid on your secured debt and may even allow you to pay what your car is worth instead of what you owe on the car. This is called a “cram down” and is allowed if the loan on your car is more than 910 days (2.5 years) old. There are other benefits to filing Chapter 13 that we would be happy to discuss.