While most people are familiar with bankruptcy, many do not know the differences between the types. The experienced bankruptcy attorneys at The Law Offices of Emil Fleysher, P.A., are here to demonstrate the differences between Chapter 7 and Chapter 13 bankruptcies as well as the options you have when filing.
You will find that as a small business owner, it is essential to understand how each type of bankruptcy will affect your company.
In fact, Chapter 7 bankruptcy is a form of liquidation and can be filed by individuals and business entities. Typically you will see that eligibility restrictions meet specific standards of disposable income being low enough to pass the Chapter 7 bankruptcy means test. It will take anywhere from three to four months to receive a discharge. Additionally, the property under Chapter 7 bankruptcy allows the trustee to sell all non-exempt property to pay creditors.
Chapter 7 bankruptcy does not allow for removing unsecured junior liens from the real property through lien stripping. It does allow for reducing the principal loan balance on secured debts but the tangible personal property only. Furthermore, the benefits of Chapter 7 bankruptcy allow for debtors to discharge qualifying debts. And, they can get a fresh start more quickly. The drawbacks of this type of bankruptcy are the granting of trustees to sell the non-exempt property. Additionally, they have the inability to provide a means of catching up on missed payments to avoid foreclosure or repossession.
In contrast to Chapter 7, you will learn that Chapter 13 is a reorganization type of bankruptcy. Only individuals, including sole proprietors, can file, and eligibility restrictions must adhere to the following: one cannot have more than $419.27 of unsecured debt or $1,257.85 of secured debt. It will usually take three to five years upon completion of all payment plans to receive a discharge.
In fact, property under Chapter 13 bankruptcy mandates that debtors keep all property. But, they pay unsecured creditors an amount equal to the value of non-exempt assets. Moreover, Chapter 13 bankruptcy allows for removing unsecured junior liens from the real property through lien stripping if specific requirements are satisfied. Again, certain standards must be fulfilled in enabling the reduction of principal loan balances on secured debts.
Furthermore, the benefits of Chapter 13 allow for debtors to keep their property. Also, it allows them to catch up on any missed mortgage, car, and non-dischargeable priority debt payments. While drawbacks include monthly payments to the trustee for three to five years, there is a high likelihood that you may have to pay back a portion of general unsecured debts.
If you are struggling with filing for bankruptcy, you should enlist help from The Law Offices of Emil Fleysher, P.A., and our team of experienced bankruptcy attorneys. We know you may have some questions or concerns regarding bankruptcy, and we are here for you. Don’t sit in agony while you contemplate your options going forward. Let our professionals handle everything. Call our office at 888-886-0020 to schedule a consultation today.