Chapter 7 vs. Chapter 13
Trying to figure out which kind of bankruptcy you can file can be pretty confusing. There are some basic differences between the two forms as well as some similarities. When you work with our lawyer, he will explain all of the details of each option to make sure you are making the decision that is right for you.Chapter 7 Bankruptcy
This is typically known as "liquidation" bankruptcy because some of your possessions could be liquidated in order to pay off your creditors a portion of your debt. A common misconception about Chapter 7 is that you lose everything. This isn't true. Mississippi allows for property exemptions for people filing for bankruptcy under Chapter 7. This includes personal property, your IRA, and in some cases your home and car. The typical Chapter 7 filer keeps all of his or her property.
Chapter 7 allows for any unsecured debts (debts that are not guaranteed by collateral) to be discharged at the end of the three- to six-month long process, such as credit card and medical bills. For secured debts, you will either have to continue making regular payments, turn the property turned over to the creditor or you will have to pay the replacement value of the property to the creditor in a lump sum payment. It is important to note that child support, alimony and student loans are usually ineligible for discharge in any bankruptcy.
You will have to take a means test to see if you qualify for Chapter 7 bankruptcy. There is a certain level of income above which you will not qualify for Chapter 7 but may qualify for Chapter 13. Debtors with primarily business debts always qualify for Chapter 7.
Chapter 13 bankruptcy allows you to keep your home, your car and much of your other property, so long as you have regular income and stick to a repayment plan to your creditors over the three to five years after filing. Chapter 13 is considered the "wage earners" bankruptcy because you must have a reliable source of income to qualify. At the end of the repayment period, most or all of the remaining debt is discharged.
There are limits to the amount of secured and unsecured debt you can have in a Chapter 13 bankruptcy filing. If you exceed the set amounts, you may not qualify for this kind of bankruptcy but may file for Chapter 11 bankruptcy