Bankruptcy Attorney Effingham IL: Chapter 7 or Chapter 13

by | Mar 3, 2014 | Lawyers

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When you walk into a law firm and tell that you want to file bankruptcy the first thing they are going to ask you is what kind of bankruptcy you are interested in filing. Unless you have filed before or you know someone who has filed you may or may not know what they mean by that question. There are technically three kinds of bankruptcy. However, unless you are filing on behalf of a business you own, you are going to be filing Chapter 13 or Chapter 7. The easiest way to figure out which one you should be filing is just to sit down with the Bankruptcy Attorney Effingham IL and assess your financial situation.

Mortgages and Car Loans

One of the major differences between filing Chapter 7 and filing Chapter 13 is connected to mortgages and/or car loans. If you file Chapter 7 chances are pretty good you are going to lose your car and your home. This is because the court is going to give them back to pay the debt you owe. Chapter 13 will give you a chance to keep your property. As long as you stick to the payment plan you have nothing to worry about.

Co-Signs and Personal Loans

When a person co-signs a loan for you they become responsible for that loan if you stop making payments. If you file Chapter 7 it might wash the problem away for you, but the lender is just going to go after whoever signed the loan for you. When you file Chapter 13, the lender will not go after the co-signer until your repayment period is over.

Chapter 7 bankruptcy seems like the better deal to most people because it wipes the slate clean with the exception of a few debts. The only problem is the fact that you will lose any valuable property or assets in the process. The court will seize these valuable items in an attempt to liquidate them and pay back some of the money you owe. Chapter 13 is about putting you on a repayment plan so you can pay off all of your debts and keep all of your assets and property.






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