| It's true that Chapter 7 bankruptcy is the most | | | | the ability to pay off your debt. |
| common type of personal bankruptcy that people think | | | | You also may prefer this type of bankruptcy filing if |
| about. It is the kind of filing where you try to discharge | | | | you are trying to keep your assets, specifically your |
| or eliminate your debt completely in exchange for | | | | home. If you're behind on your mortgage payments |
| liquidating any assets you may have (which is usually | | | | you can use this kind of proceeding to help you catch |
| not much). However, there is another type of | | | | up on your payments and not lose your home. Under |
| bankruptcy known as Chapter 13 which creates a | | | | Chapter 7, your unsecured debts can be wiped out, |
| payment plan instead of simply doing away with your | | | | but you still have to pay the lien holders such as the |
| financial obligations. | | | | mortgage company and your car company in order to |
| Why would you follow Chapter 13? Well, first of all you | | | | keep those assets. |
| may be forced to choose this route because you do | | | | How do you know if you qualify for Chapter 13? Well, |
| not qualify for Chapter 7. Under the recent changes in | | | | for one thing there is a limit on the amount of debt that |
| the bankruptcy code, you have to prove your inability | | | | you can owe. It's pretty high, but you should still be |
| to keep up with your bills in order to qualify for Chapter | | | | aware of it. The maximum amount of unsecured |
| 7 and have your debts completely wiped out. | | | | debts is $307,675, while secured debts should not |
| Otherwise, you may be forced to create a repayment | | | | exceed $922,975. |
| plan so you can pay back creditors at least part of | | | | Also, if you filed any kind of bankruptcy proceeding in |
| what you owe them over the next three to five years. | | | | the last few years, this may change things quite a bit. |
| How is this determined? Well, there is a new and | | | | For example, you may be forced to pay off your |
| complicated evaluation process called the means test | | | | creditors completely during a repayment plan instead |
| which examines your monthly income and compares | | | | of settling for pennies on the dollar. |
| that to your expenses to determine whether you have | | | | |