When filing for bankruptcy there is certain qualifications that must be met, such as income. However, once you have met the requirements and paid your fee you are basically halfway to having your clean slate – depending on which chapter you filed under. You will have some other minor things to do such as attend a state approved credit counseling class. But, many people find that this is nothing compared to the opportunity that is being provided to them.

Overall, if you go with Chapter 13 bankruptcy you should understand that it is considered to be more of a debt consolidation. You will make monthly payments on all of your debts so it may not affect your credit as much as filing Chapter 7.

Types of Bankruptcy

As we mentioned previously bankruptcy can be classified as either Chapter 7 or Chapter 13. The two are very different so this is why we will discuss each chapter separately.

If you are someone who is just trying to find a way to get a fresh start it would be in your best interest to go with Chapter 7. When you start researching on Chapter 7 you may hear it referred to as “liquidation”. This means is that you will have to give up any and all of your assets that are not covered as being exempt in the jurisdiction you will be filing for bankruptcy so you will be eligible to receive a clean slate when it comes to your debts. However, there are also a few things that you should be aware of before you think of taking this route.

You are going to have to pay a court filing fee
You will have to complete a credit counseling course that has been state approved
The process can take anywhere from approximately four to six months
Things such as student loans and parking tickets are not able to be cleared under this chapter
You are only able to complete Chapter 7 filing once every 8 years
There is an income requirement that must be met before you will even be allowed to file under this chapter
If you are someone who is trying to keep your home from going into foreclosure or you just need all of your debts consolidated into one for a chance to be able to pay a more affordable monthly payment you may want to consider Chapter 13. When you start doing research on Chapter 13 you may also hear it referred to as “reorganization”. This just means that you are able to still pay off your own debts you just need them combined. However, before you take this route there are some things that you may want to know.

There is a court filing fee that you will be expected to pay outside of your attorney fee
You must complete credit counseling by a state approved program
You can expect to have a payment plan that is going to last for approximately 5 years
Unlike Chapter 7 bankruptcy you are able to include student loans and parking tickets
You can file Chapter 7 bankruptcy as many times as you want
Your income must be at a certain amount but a number of things are included, such as social security and child support just to name a few