Which Chapter?


Which Chapter?


In Chapter 7 property that you own, not exempt under state law, is gathered into an “estate” that may be sold to pay creditors.  A benefit of Chapter 7 is finality (you get your fresh start sooner and you get to begin rebuilding your credit sooner).  To qualify for Chapter 7, your monthly income less reasonable expenses times 60 must be less than: the greater of 25% of your unsecured debt or $6,575; or it must be less that $10,950.  If you do not meet this test, you must file under Chapter 13.

Read More: http://www.uscourts.gov/bankruptcycourts/bankruptcybasics/chapter7.html

Individual Reorganization

Chapter 13 is for individuals with unsecured debts less than $336,900 and noncontingent, liquidated, secured debts of less that $1,010,650.  To qualify for a Chapter 13 you must have regular income.   Plan confirmation requires: the elimination of unnecessary expenses (you do not have to sell property that you own); payment to creditors that is at least what they would receive in Chapter 7; and payment of income that is above median income into the plan for 3 to 5 years.

Read More: http://www.uscourts.gov/bankruptcycourts/bankruptcybasics/chapter13.html

Business Reorganization

Chapter 11 is, generally, used for business reorganization; however, individuals whose debts exceed the statutory limits in Chapter 13 may qualify to file under Chapter 11.  A Chapter 11 debtor must offer a plan ofreorganization that is “reasonably within prospect” and the debtor may retain property that is “necessary to an effective reorganization.”