Bankruptcy

Chapter 7 Bankruptcy

Two types of bankruptcy cases are available to individuals and married couples. These are Chapter 7 bankruptcy and Chapter 13 bankruptcy. Chapter 7 bankruptcy, sometimes called "liquidation bankruptcy", is the type of bankruptcy most people file. Chapter 7 eliminates your unsecured debts.

In a Chapter 7 bankruptcy, you are entitled to claim various exemptions. These exemptions protect your property - both real estate and personal property - up to a certain dollar amount from being taken from you. In the overwhelming majority of Chapter 7 bankruptcy cases filed in Idaho, all (or virtually all) of a person's property is exempt.

Once you file a bankruptcy case the "automatic stay" goes into effect. This "automatic stay" immediately stops creditors from attempting to collect on debts. The "automatic stay" protects you, at least temporarily, from creditors garnishing your wages, trying to repossess your car, taking money from your bank account, cutting off your utilities, and more.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy allows individuals and couples to pay off debts - or a percentage of your debts - over the course of 3 to 5 years under an installment payment plan. How much you pay back to your creditors varies, depending on the amount an individual or couple may have available to repay creditors, taking into account living expenses. Generally, any unpaid debts remaining at the end of your 3 to 5 year repayment plan are then wiped out. 

There are a number reasons why an individual or couple may file under Chapter 13. If you are behind on your mortgage or car payments, and you want to keep your house or car, you can repay the arrears over the course of your Chapter 13 plan. Child support arrears can also be included in a Chapter plan, as can non-dischargeable tax debts. Also, some people are not eligible to file a Chapter 7 case because they have already filed one in the recent past, but a Chapter 13 case is usually available to them. 

A Chapter 13 bankruptcy may be a good option for individuals and couples who, though they may have run into some financial difficulties in the past, now have a steady income that can cover not only their living expenses, but also, some of their debt over time.