The news is full of stories about the improving economy for our nation. It is not uncommon to hear stories about lower unemployment rates and increased levels of disposable income. However, many Connecticut families are still mired in financial struggles. Some have reached the decision to file for bankruptcy to get their finances back in shape. Once that major decision has been made, there is still another one to consider — should someone file for Chapter 7 or Chapter 13 bankruptcy?
In general terms, bankruptcy is a process that helps consumers or businesses with their debts. There is a federal Bankruptcy Code with chapters describing the terms and process involved for each type of bankruptcy. Several of the chapters pertain strictly to businesses. The primary types for consumers are either Chapter 7 or Chapter 13. Making the decision to file for bankruptcy is a major one, so determining which type will be most beneficial is also a critical step.
Chapter 7 is commonly known as a liquidation process. Some of a person’s assets are sold to pay back creditors. However, some property is exempt from the process and does not have to be sold. Each state has its own exemptions. Also, bankruptcy law has specific qualifications to meet in order to file for Chapter 7.
For those that do not quality for Chapter 7, many choose to file for Chapter 13. This type of bankruptcy is characterized as a repayment plan. The filer proposes a plan to the court and creditors have a chance to have a say. When a plan is approved by the court, the repayment period is generally three to five years.
Determining whether to file for Chapter 7 or Chapter 13 bankruptcy can be a daunting decision. A Connecticut bankruptcy attorney can provide helpful guidance when making this decision. An experienced lawyer will help clients reach the best solution to get their financial path headed in the right direction.