The economic downturn and financial crisis have snatched away the smiles and sleep of many Americans. The day by day increasing interest rates and late repayment charges were being the great cause of financial depression for many. In such a crucial situation the mortgage payments were the main problem and important cause of the financial worries.
In such a situation, there was no other way left except filing petition against the business or personal bankruptcy. However, the federation has various types of Bankruptcy Laws but most filed bankruptcy was either the Chapter 7 Bankruptcy or the Chapter 13 Bankruptcy. By filing petition under Chapter 7 or Chapter 13 Bankruptcy foreclosure can be prevented and financial stability can be regained. This is still for many a matter of confusion about both types of bankruptcies. However, to resolve the confusion the following differentiation will really be very helpful:
The Chapter 7 Bankruptcy Petition
Under this type of bankruptcy, debtor can eliminate most of his/her unsecured loan amount completely or partially. This is the personal bankruptcy hence business bankruptcy petition will not be entertained, under this law by the Bankruptcy authorities. Only the individuals can file Chapter 7 bankruptcy petition. The debtor is asked to surrender all his/her property to the bankruptcy authorities and foreclosures are made. The debtor can keep only cloths and some of the house hold things. The debtor is relieved on his commitment to repay the debt within the given duration. However, the debtor can get relief from the traumatic harassments of the recovery officers.
The Chapter 13 Bankruptcy Petition
Under this Bankruptcy mostly the small business entities file petition. The business owner or the debtor needs to surrender all his/her property. However, his mortgaged house and car can be exempted and he can keep the both under Chapter 13 bankruptcy process. Once whole debt amount is recovered the debtor can retain the surrendered property back. The Bankruptcy authorities and Bankruptcy counseling agencies will have an in-person meeting with the Debtor and the creditor to find out a peaceful way to settle the debt amount. The debtor is required to plan out how he will work out to repay the entire debt amount in the given time window of five to six months. However, if the unsecured loan amount is more than $3, 36,900 and secured loan amount is more than $1,010,650, the debtor cannot get the settlement done under this bankruptcy. The business firm has to perform in the given time window to generate profit to make the Chapter 13 bankruptcy payment. The accumulated amount of money will every month go to the bankruptcy attorney and they will distribute the same among the creditors.
This is clear that by filing petition under bankruptcy you can prevent the early foreclosures and postpone it for certain time period. The creditors have to stop the recovery process. However, this is advisable to hire a professional Bankruptcy attorney who can help you to understand the bankruptcy process.
William Bridget: I’ve written many articles over the debt settlement options. Before filing bankruptcy understand the difference between the Chapter 7 bankruptcy petition and Chapter 13 bankruptcy petition. To hire the professional Bankruptcy services are really beneficial to ensure the proper bankruptcy process.