Chapter 7 bankruptcy and chapter 13 bankruptcy are the two types of bankruptcy most often used by consumer. Chapter 7 is typically used by those with little non-exempt property and less than median income. Chapter 13 is often used by consumers who desire to propose a chapter 13 plan of reorganization to provide for their various debt over a 3 to 5 year plan of reorganization.
How does a person decide which chapter is best?
Various items need to be considered in determining whether to file for bankruptcy under chapter 7 or chapter 13. One item to be reviewed is the "mean test" which was added to the bankruptcy code in 2005. Also, if a person has substantial property in excess of that which is "exempt," filing under chapter 13 would likely be appropriate. If a person is behind with their mortgage or in a foreclosure, they would consider using chapter 13 to propose a plan to reinstate their mortgage.
May a person file for bankruptcy for just some of his debt?
A person is required to list all of his or her debt in the bankruptcy case. Those debts that are dischargeable will be discharged. A person though is free to voluntarily repay any debts if they should so desire.
