Chapter 7 is a type of bankruptcy geared toward those with limited or no income and few assets. Chapter 7 allows the filer to discharge most types of debt, including credit card debt, bills related to medical expenses, judgments, and garnishments while protecting one’s personal assets. Importantly, this type of bankruptcy is only applicable for those without the disposable income to pay back their debts.
Chapter 13 bankruptcy allows the debtor to take part in a three- to five-year repayment plan while protecting their personal property. For those with a regular source of income who could reasonably pay off their debts over this period, Chapter 13 bankruptcy is a good fit. This type of bankruptcy also allows a debtor to repay debts that are not able to be discharged under any circumstances, such as child support.
Debt consolidation means taking out a loan to cover existing debts, then making payments on that loan. For some, Chapter 7 and Chapter 13 bankruptcy is not a good fit, so debt consolidation acts as an alternative solution. Every case is different, so call the bankruptcy experts of Burr Law Office to discuss your specific situation.