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Good reasons to Use Chapter 13 Bankruptcy Preferably instead of Chapter 7 Bankruptcy

If you have determined that you might need to file bankruptcy, most individuals most likely are not informed of the numerous options offered. Chapter 13 Bankruptcy and Chapter 7 Bankruptcy are the chapters of bankruptcy selected most very often by individuals. There are actually various similarities, but also some people differences between these types of bankruptcy. These are most suggestions to help you decide which type of bankruptcy to file. Don't forget that this will not substitute the help and advice of a Los Angeles bankruptcy attorney. Chapter 13 is generally chosen due to the fact a consumer can't qualify for chapter 7, but you'll find most valuable benefits for people in certain issues including those with a foreclosure, reposession, second mortgage.

A chapter 7 bankruptcy ?s often a liquidation proceeding that will allow for a consumer to clear away just about all of his or her unsecured debt. In this system, the bankruptcy trustee is likely to liquidate many of the debtor's nonexempt property to repay these creditors. Exempt property is often all of the debtors property under $23,000. You will discover other exemptions available that a Los Angeles bankruptcy attorney can help you utilize in order to maximize the amount of assets you can keep. The chapter 7 has marginal impact on secured assets except the automatic stay which would prevent any attempts to collect from the consumer such as foreclosures & repossessions.
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A chapter 13 bankruptcy utilizes your excess income to develop a repayment plan to repay a person's creditors over 3 to 5 years. This excess income is established by utilizing the debtor's income minus expenses paid by the consumer. Expenses, for calculation purposes, don't include amounts paid to creditors mainly because these are generally debts, not expense (except for for secured debts, such as a home mortgage or auto loan). Nonexempt property may increase a person's repayment amount above this excess income.

Chapter 13 bankruptcy is important for many who would like to remove a second mortgage. Where the loan amount of the 1st mortgage exceeds the market value of the home, the 2nd mortgage can be removed. Since the first mortgage exceeds the market value of the home, there is essentially no collateral backing the second mortgage. In a chapter 13 lien strip the second mortgage is changed from a secured debt into an unsecured debt and the 1st mortgage is reduced to the market value of the home. In a chapter 13, only secured debts, and particular other debts, have to be paid completely before a discharge is attained, as a consequence unsecured creditors will receive possibly nothing or hardly anything.

While in a foreclosure, a chapter 13 bankruptcy can be helpful. While a chapter 7 may trigger an automatic stay which usually stops a foreclosure sale, you may still have to repay most of a person's arrearages immediately or they may be able to take a person's home at the end of the stay. A chapter 13, on the other hand, may allow you to put the arrearages in your repayment plan and you can be able to keep your home.

Chapter 13 can also help where a motor vehicle, or other collateral is about to be repossessed. Although the automatic stay in chapter 7 bankruptcy can prevent the repossession temporarily, it is mostly unhelpful due to the fact the consumer must immediately pay off the arrearages on the loan. In contrast, a consumer filing a chapter 13 bankruptcy can keep the car, and the missed payments become a part of the repayment plan which the borrower pays in addition to his regular car payment.

Chapter 13 is also invaluable where there has already been a repossession. Filing a chapter 13 forces the lender to return the vehicle to the consumer with the back payments becoming part of the repayment plan and the regular car repayment continues to be a separate bill. A Chapter 7 bankruptcy has no effect and the only way to retrieve the car, outside of chapter 13 it is to pay off the entire balance of the car.

Choosing between chapter 13 bankruptcy and chapter 7 bankruptcy can be tricky. A Los Angeles bankruptcy attorney can look at an individual's financial situation and provide you with the information you have so that you can make the right decision. Feel free to get in touch with the Law Offices of Alon Darvish to discover more about a person's bankruptcy options. You may reach him personally at (800)921-6513 or visit his websit at www.BankruptcyLALaw.com

Locate the right Los Angeles Bankruptcy Attorney.