When a debtor with a high income is in financial crisis, bankruptcy information can be invaluable, especially if they are behind on car or mortgage payments. A Chapter 13 repayment plan is the top choice for debtors who can’t qualify for Chapter 7 due to income restrictions, and for those who are in danger of losing their vehicles and homes.
The Differences between Chapters 7 and 13
Along with finding out more about Chapter 13 bankruptcy in St. Charles, MO, debtors should also take the time to learn enough about Chapter 7, to ensure that the former is the better option. Some differences between the bankruptcy chapters include those listed here.
• Debtors must meet strict income requirements to be eligible for Chapter 7. Their salary must be less than or equal to the state average, but a higher-income debtor can qualify by taking and passing the means test. This test is an income calculation that determines whether the debtor has disposable income sufficient to pay creditors.
• Debtors do not lose property in Chapter 13 bankruptcy in St. Charles, MO, as long as they can make house and car payments while paying debts. During Chapter 7, the court-appointed trustee takes all property that’s not exempt.
• Debtors can usually get a Chapter 7 discharged in about six months. However, Chapter 13 debtors remain under court supervision during the repayment plan term, which can be up to five years.
Other Important Facts to Consider
Roughly 30% of individual debtors choose Chapter 13 bankruptcy, but that number rose after changes were made to the bankruptcy code in 2005. The changes were made to stop debtors from using Chapter 7 in lieu of financial planning, and to encourage them to use Chapter 13’s repayment system instead. Chapter 13 costs less to file than Chapter 7 does, but the attorney’s fees in a Chapter 13 case are, typically, significantly higher.
A Chapter 7 fee can range from $500 to $1,500, while filing for Chapter 13 bankruptcy in St. Charles, MO, will cost anywhere from $1,000 to $3,000. This is due to the length of the repayment plan, and the high chance that a lawyer with Website.com will be called upon multiple times. Chapter 13 requires the debtor to divulge more of their information, because it is the debtor’s responsibility to suggest a repayment plan that takes all their disposable income to pay debts and legal fees.
