Each to his own’ rightly suits about the two bankruptcy laws. While both are good, which is apt for the client depends upon his situation – The type of debt, their financial situation and the resources with the debtor. A professional practitioner in bankruptcy can help the client in deciding which is best for their situation. For detail information about chapter 7 & 13, visit Recovery Law Group.
Chapter 7 bankruptcy law requires eligibility of the applicant. The applicant needs to prove his eligibility. For proving the eligibility for chapter 7, five factors are assessed.
The equation between the income and the expenses shows the saving quotient. Do the debtor’s expenses run higher than his savings? More importantly, is his income in the past 6 months below the median income of the State? If the monthly income is less, with no steady means to pay loans, then the applicant is eligible for chapter 7.
Assets can be luxurious and non-luxurious. The client can own luxurious assets and still would want to declare bankruptcy. There are some assets that the State lists under exempted, which the client can keep. The non-exempted assets like the luxurious ones whose value surpasses the limit determined by the court are put on sale to clear off the debts. Assets are evaluated to estimate the financial situation of the applicant.
- Credit report
The credit report will show the type of debts the client has. While some debts are dischargeable, debts like a student loan, tax debt, child support loans are non-dischargeable. Such debts cannot be addressed under chapter 7 but can be addressed under chapter 13.
The court investigates the latest bills and transactions of the client. If he has sold or purchased things above a limit, the court can disqualify his eligibility for chapter 7. As per court if the client is indulging in an expensive lifestyle, then he is careless of his situation and hence is not a genuine applicant for chapter 7 bankruptcy.
Timing is a crucial factor in deciding the eligibility of the client. Timing before filing the tax return, timing before a due bonus, may affect the eligibility. Receiving more than 25 pay-checks within the last 6 months can disqualify the applicant. The client can receive 2 paychecks per month, and while he files for chapter 7, he may land with 26 pay-checks, and get disqualified.
Chapter 13 Bankruptcy Dallas is for those who have a steady income and can dispose of small amount of income every month to clear off the debt. A payment course is planned for 3 or 5 years depending upon situations. The debtor must pay till 3 years as per the repayment plan after which his loans are dischargeable. By employing chapter 13 the debtor is not only able to save his assets but partly discharged from a big loan.
The bottom line is the debtor must consult with an experienced bankruptcy advocate about his financial situation before arriving at a decision. Depending upon the financial situation the advocate can suggest the best course of action. It is not a generalized decision but a personalized one. The debtor can seek suggestions/advice by calling on-888-297-6203.