Discharge of chapter 7 and 13

In chapter 7 bankruptcy it is necessary to obtain mandatory credit counseling within 180 days before filing bankruptcy petition. File bankruptcy petition with court. A trustee should be appointed to administer bankruptcy. All non-exempt assets should be surrendered for liquidation and distribution. Debtor retains only exempt assets. Money from liquidation is split among creditors, according to priority established by the Bankruptcy Code. In chapter 13 it is necessary to obtain mandatory credit counseling within180 days prior to bankruptcy. File bankruptcy petition and proposed payment plan with court. Payment plan provides payments over a period of three to five years. As a result of new law, more plans will be for five years. Payments are made from disposable income, means whatever is left over after providing for the basic necessities like food, shelter, etc., while debtor retains assets. In chapter7, most pre-petition debts are discharged upon conclusion of bankruptcy with certain exceptions like student loans, support obligations, taxes. In chapter 13 all or a portion of debts are paid off over a period of time under a specific plan. With exceptions noted in text (e.g., student loans, support obligations) debts are discharged. Eligibility: One has to pass through the means test to qualify for the bankruptcy program as been discussed earlier. There is a lot of calculation to be done as the state laws apply differently for the different states. Whether or not bankruptcy had been filed before: It is very important to find out whether bankruptcy had been filed before or not, because once chapter 7 had been filled one cannot file another bankruptcy for the next 8 years, there can be a conversion to chapter 13 bankruptcy, and then to chapter 7 but there also the eligibility factor applies. It is therefore important to note that it would lower the credit score because; both the chapter 7 and chapter 13 bankruptcies will appear on the credit report together. Non discharge able debts: There are apparently 2 types of debts, obligatory or non discharge able debts and the discharge able debts. Obligatory or non discharge able debts include child support, alimony, income tax and student loan. It is useless to file a chapter 7 bankruptcy with these kinds of debts, as these debts will remain as usual even after discharge. In this situation one can file the chapter 13 bankruptcy instead. Non Exempt Property: There are two types of property, mainly exempt and non-exempt. In chapter 7 bankruptcy the non-exempt property is at risk of liquidation. So, it is important to evaluate as to how much of the property is at risk, before filing for bankruptcy. Take care of your co-signers: One should take care of their co-signers or the people who are held liable for the debts, because although the debts are discharged the co-signers will still be held responsible, as bankruptcy does not discharge all types of debts. Although bankruptcy does resolve a lot of problem for people in distress, still one should take care of the outcome before filing bankruptcy. It might be advantageous for one but disadvantageous for others.