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A Chapter 13 or reorganization bankruptcy involves creating a plan to repay your creditors, taken from your earnings, at a percentage of what you owe them — up to 100 percent.
Type of bankruptcy. What it means for you. Chapter 7. Often referred to as liquidation, this type of bankruptcy means selling off your non-exempt assets to repay your debt.
Chapter 7 is the most common form of bankruptcy, allowing someone to completely eliminate (or liquidate) their debt after a specific amount of time. Chapter 13, on the other hand, restructures ...
The disadvantage of filing for personal bankruptcy is that, under the Fair Credit Reporting Act, a record of this stays on the individual's credit report for up to 7 years (up to 10 years for Chapter 7); [5] still, it is possible to obtain new debt or credit (cards, auto, or consumer loans) after only 12–24 months, and a new FHA mortgage loan just 25 months after discharge, and Fannie Mae ...
3 years for Chapter 7; 1 year for Chapter 13 3 years Many lenders require a seven-year waiting period after a bankruptcy or foreclosure before they will lend to a borrower again.
In a Chapter 7 Bankruptcy ("Liquidation") the trustee gathers the debtor's non-exempt property, managing the funds from the sale of those assets, and then paying expenses and distributing the balance to the owed creditors. In a Chapter 13 Bankruptcy ("Reorganization") the trustee is responsible for receiving the debtor's monthly payments and ...
From there, two potential consequences could occur: a case dismissal or conversion to Chapter 7 bankruptcy. Case dismissal. After one or more missed Chapter 13 payments, the trustee may file a ...
Long repayment period: Chapter 13 typically requires a three- to five-year repayment plan, which can be a lengthy commitment compared to Chapter 7, where debts are usually discharged in a few months.