A Brief Overview of Chapter 7 and Chapter 13 Bankruptcy

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Are you planning to file a petition for a Chapter 7 or Chapter 13 bankruptcy? Were you aware that when you employ the services of an attorney for this process, the success rate for Chapter 7 bankruptcy claims exceeds 95%? When an attorney’s services are employed for Chapter 13 claims, the success rate is 55%.

Business bankruptcies in 1980 comprised approximately 13% of all bankruptcy cases. In 2014, the most bankruptcy filings came from California, Florida, Illinois, Georgie, and Ohio. Of the total number of bankruptcies filed in the United States at that time, 97% were personal and three per cent were business.

Currently, business bankruptcies represent approximately three percent of all bankruptcies. There are over 1.5 million people, on average, that petition for bankruptcy every year, according to U.S. Bankruptcy Court statistics.

There are several reasons why an individual may want to file for bankruptcy. According to a recent Harvard University study, 62% of the United States’ personal bankruptcies are due to medical expenses. Furthermore, approximately 15,000 bankruptcies are filed every year due to student loans; this comprises almost one percent of bankruptcies in the United States.

A business may choose to file bankruptcy, according to the United States Courts, because this process can help them pay off their debts and start over. When a business is unable to pay their debts and is experiencing financial trouble, filing bankruptcy will usually involve liquidating their assets to pay creditors. In addition, these businesses may also create a repayment plan with the assistance of the bankruptcy court.

One of the differences between a Chapter 7 and a Chapter 13 bankruptcy case, according to United States Courts, is that a repayment plan does not need to be filed for a Chapter 7 bankruptcy case. Instead of a repayment plan, and in keeping with provisions of the Bankruptcy Code, a bankruptcy trustee will collect and sell any nonexempt assets. The proceeds from these sales will be used to pay the filer’s creditors.

The United States Courts also states that when an individual files for Chapter 7, they may lose property. This is due to liens and mortgages that may be pledged to creditors.

When filing for bankruptcy, there is a $335 filing fee for Chapter 7 cases. The fee is $310 for a Chapter 13 case. While an average Chapter 7 may cost from $1,500-to-$3,000, a Chapter 13 case may cost more due to additional financial considerations.

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