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What Are The Differences Between A Chapter 7 And A Chapter 13 Bankruptcy In Downey, CA?

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Chapter 7 and Chapter 13 bankruptcy in Downey, CA are two very different legal options, but each is designed to help those who are having trouble with debt.

Chapter 7 bankruptcy can help you clear some or most of your debt in about 3 or 4 months. But, in order to do so, you may have to surrender property, cash, and other assets. Speak to a Chapter 7 bankruptcy attorney in Downey, CA for additional details.

Chapter 13 bankruptcy can help you get a portion of your debt discharged and enables you to repay the debt through a three-to-five-year repayment plan. You will get to keep your assets and property in this arrangement. Speak to a Downey, CA lawyer for Chapter 13 financial solutions for additional details.

It’s important to note that there are some debts that will never go away. They include:

  • Child support
  • Alimony
  • Certain taxes
  • Student loans

You should consider the differences between chapter 7 and 13 and definitely consult with a bankruptcy attorney in Downey before making any final decision.

Pros and Cons of Chapter 7 Bankruptcy

Here are some things to consider about Chapter 7 bankruptcy.

  • Pro – Lower monthly debt load. When your debts are erased through Chapter 7 bankruptcy, you’re no longer required to pay that debt back. That means the money you were paying toward medical debts or credit cards, for example, can now be used for household necessities. There are a number of debts that can’t be discharged in Chapter 7, so contact a Chapter 7 bankruptcy attorney in Downey, CA before you file for chapter 7.

  • Pro – Stops debt collectors. When you file for bankruptcy, debt collectors have to stop calling you and your wages can’t be garnished. Any lawsuits filed against you from creditors must end as well.
  • Pro – It’s fast. Chapter 13 bankruptcy typically takes three to five years to complete, Chapter 7 generally takes about 90 to 100 days from start to finish.
  • Con – You’ll lose some assets. One of the main consequences of filing Chapter 7 is the possible loss of your assets. You could lose cash, your home, or your car. A Chapter 7 bankruptcy attorney in Downey, CA will do everything in his or her power to help you keep as many assets as possible.
  • Con – Your credit will be ruined. A Chapter 7 bankruptcy can stay on your credit report for up to 10 years from the date you file. You’ll be much less likely to get a loan, rent an apartment, or be able to open a credit card. If you are approved, expect to pay higher interest rates.
  • Con – Attorney’s fees are paid right away. With a Chapter 13 bankruptcy, the attorney’s fees are added to your monthly payment. But with Chapter 7 bankruptcy, you’ll have to pay much sooner, which can be hard to do since money is already tight. You can always talk to your Chapter 7 bankruptcy attorney about payment arrangements.

Pros And Cons Of Chapter 13 Bankruptcy

Here are some things to consider about Chapter 13 bankruptcy.

  • Pro – Less severe credit impact. Chapter 13 bankruptcy may have a very negative impact on your credit but it stays on your credit report for 7 years, not 10 like with Chapter 7. Also, some creditors could view a Chapter 13 bankruptcy more favorably than a Chapter 7 bankruptcy because it’s an indication that you’ve repaid more of your debt.
  • Pro – It can stop debt collections and foreclosure. Filing Chapter 13 can stop the foreclosure process and give you a chance to catch up on your past-due mortgage payments. Also, your creditors can no longer take any action to try to collect money from you.
  • Pro – It can help you repay your debt. With Chapter 13, you’ll make a plan to repay all or some of your debts. You’ll make one monthly payment to a court trustee who will then distribute payments to your creditors based on your repayment plan.
  • Con – It can take up to 5 years to erase debts. Chapter 7 bankruptcy can help you discharge your debts in months. Under Chapter 13, responsibility for your debt doesn’t end until your repayment plan has been completed, which typically takes three to five years.
  • Con – The repayment plan can be a challenge. Making one payment a month may be convenient, but it’s a big monthly payment that may take up all if your disposable income.
  • Con – There are consequences to missing payments. If you can’t stick to the repayment plan, you could lose your Chapter 13 status, which means creditors can start coming after you again. Or, your case could be converted to Chapter 7 bankruptcy, which means you could potentially lose assets that were protected under Chapter 13 bankruptcy.

How Do I Know Which Type Of Bankruptcy Is Right For Me?

If someone is behind on making payments toward an asset that they want to keep (like a house), and they have enough income to make the Chapter 13 plan payments each month, then they should consider talking to a Chapter 13 bankruptcy attorney in Downey, CA about filing for Chapter 13 bankruptcy.

If someone doesn’t have enough income to qualify for Chapter 13 bankruptcy and cannot afford their expenses each month, then they should consider filing for Chapter 7 bankruptcy.

For more information on Filing For Chapter 7 Bankruptcy Or Chapter 13 Bankruptcy, a free initial consultation with a Downey, CA bankruptcy attorney is your next best step. Get the information and legal answers you need by calling 213-583-5547 today.

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