Ch. 7 vs. Ch. 13 Bankruptcy in Northern Colorado
Millions of people find themselves in financial trouble every year. Filing for bankruptcy is nothing to be ashamed of—it’s a completely legal means of addressing insurmountable debts and getting one’s finances back on track. The Sumner Law Office, P.C. has years of experience helping individuals, business, and families in Northern Colorado navigate the bankruptcy process. If you’ve fallen on hard times, Mr. Sumner can help you identify the differences between Chapter 7 and Chapter 13 bankruptcy and help you determine which one will best suit your needs.
Chapter 7: Also known as “liquidation bankruptcy,”
Chapter 7 bankruptcy allows debtors to eliminate their outstanding credit card balance, medical bills, and other unsecured debts. Those who file for Chapter 7 bankruptcy may have some of their assets “liquidated” in order to repay creditors.
Chapter 13: Also known as reorganization bankruptcy, Chapter 13 bankruptcy permits debtors to reorganize their secured and unsecured debts and pay their creditors through a three- to five-year repayment plan. Those who file for Chapter 13 bankruptcy do not have to forfeit their property.
Who Can File
Chapter 7: Individuals, married couples, and business entities may file for Chapter 7 bankruptcy. However, debtors wishing to file for Chapter 7 bankruptcy must first pass the “means test,” and prove that their income is less than the state median for a household of the same size.
Chapter 13: Only individuals who earn an income may file for
Chapter 13 bankruptcy. To repay debts through Chapter 13 bankruptcy, an individual must have less than $383,175 in unsecured debts and $1,149,525 in secured debts.
Chapter 7: Once a debtor files for Chapter 7 bankruptcy, a court-appointed trustee reviews the debtor’s finances, sells nonexempt property, and repays the debtor’s creditors with the proceeds. A Chapter 7 discharge typically takes three to five months.
Chapter 13: After filing a Chapter 13 petition, the debtor must produce a detailed repayment plan for the court trustee, and the plan is scrutinized during a confirmation hearing. If the repayment plan is approved, the debtor will have between three and five years to repay his debts.
Jerry Sumner, Esq. is a bankruptcy attorney serving Northern Colorado. If you’ve reached a dire financial situation and need to file for Chapter 7 or Chapter 13 bankruptcy in Westminster or elsewhere in Northern Colorado, contact The Sumner Law Office.