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Chapter 7
Chapter 7, often called "straight bankruptcy," seeks the discharge (cancellation) of your unsecured debts such as credit cards, personal loans, and medical bills.  You may ordinarily retain your residence and vehicles while you remain current on your mortgage and vehicle loan payments.  Debts such as student loans, child or spousal support, and most taxes are not dischargeable.  Your Chapter 7 case will usually be concluded within three months, although your creditors are stopped as of the very day of your case filing.  Chapter 7 is only appropriate when the net value of your assets is within certain limits (called exemptions). While most folks' assets are within these limits, if your assets exceed these limits you would be a candidate for a Chapter 13 plan.  Chapter 7 is not available to debtors who have enough income exceeding their basic living expenses (called "disposable income") that they can afford to repay a portion of their debts through a Chapter 13 payment plan.  To qualify for Chapter 7 you must not have had a previous bankruptcy discharge of your debts within the last six years.

Chapter 13
Chapter 13, often called a "wage-earner's plan" or "debt consolidation," involves your participation in a minimum 36-month payment plan where you repay a certain percentage to your unsecured creditors (you may think of a Chapter 13 as a "partial bankruptcy.")  The aim of Chapter 13 is to give you a payment on your debts that you can afford.  At the conclusion of your case the remainder of your unsecured debts are discharged (canceled).  Chapter 13  permits one to avoid foreclosure and catch up on back house payments.  It can lower most vehicle payments. It can discharge certain types of debts not dischargeable in Chapter 7, particularly taxes. As to debts that cannot be discharged, Chapter 13 can still protect you from creditor harassment or lawsuits while permitting you to pay the nondischargeable debts over the course of your Plan.  While Chapter 13 is more involved than Chapter 7, it can solve many problems beyond the scope of a straight bankruptcy.  Chapter 13 requires you to have a regular income sufficient to pay both your regular living expenses plus your monthly Plan payment to the Bankruptcy Trustee.

Applicable to Both Bankruptcy Chapters.
Both types of bankruptcy take effect immediately upon your case filing; creditors must cease all lawsuits, repossessions, foreclosures, and collection efforts at once.  Bankruptcy is a right secured to you under the U.S. Constitution and involves no guilt or shame to you; your personal dignity will be in no way infringed by the bankruptcy process.  In all cases you must be complete and truthful in the listing of all of your obligations and assets.  It can be very dangerous to transfer assets to pay certain obligations particularly to relatives, on the eve of bankruptcy.  Do not engage in any property transfers or debt repayments without first obtaining the advise of a qualified attorney.  There is no meaningful distinction between bankruptcy chapters insofar as the time and effort needed to rebuild your credit.  A bankruptcy filing will remain on your credit record for seven to ten years although most folks can rebuild their credit within two to three years.

Take the first step toward achieving a fresh financial start. Contact the Clark A. Miller Law Offices today for effective, quality, and experienced bankruptcy legal representation.

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Clark A. Miller Law Offices
215 W. Alisal Street
Salinas, CA 93901
Salinas: (831) 424-1764
Hollister: (831) 638-1820