Financial hard times can fall on just about anyone in Bridgeport. A job loss in a tough economy, a mortgage that is underwater or an illness that leads to massive medical bills can all spell financial catastrophe. In these situations, a person in Connecticut may consider filing for Chapter 7 or Chapter 13 bankruptcy.
In a Chapter 7 bankruptcy, your nonexempt assets will be liquidated, and the proceeds used to pay back your creditors. The Chapter 7 bankruptcy process takes a matter of months. Through this process, many of your debts will be extinguished. However, some debtors will pursue a Chapter 13 bankruptcy. In a Chapter 13 bankruptcy, you will make affordable payments each month to a Chapter 13 Trustee, who will distribute those funds to your creditors over the course of three to five years.
You may wonder why one would choose the lengthier Chapter 13 process in which they still have to make monthly payments for years over the shorter Chapter 7 process that releases you from many of your debts once the process is complete. However, there are some advantages to filing for Chapter 13.
First, some debtors simply earn too much to qualify for a Chapter 7 bankruptcy filing. Also, Chapter 13 allows debtors to keep assets that they may have otherwise have to give up if they filed for Chapter 7 bankruptcy. In addition, although they cannot be discharged, attorney’s fees, past-due income taxes and delinquent child support and spousal support payments can be included in the Chapter 13 repayment plan. Through Chapter 13, a debtor can also pay overdue financial obligations owed on homes, automobiles and other loans that are supported by collateral.
Ultimately, deciding whether to pursue a Chapter 7 bankruptcy filing or a Chapter 13 bankruptcy filing is a personal decision, and there are advantages and disadvantages to each. Bankruptcy attorneys understand the concerns debtors contemplating bankruptcy have and may be a useful resource.