Omaha residents who are considering filing bankruptcy should study the two main types of bankruptcy available to them before making a decision. The two chapters to consider are Chapter 7 and Chapter 13. Each debtor’s particular financial situation will fit within one of these two bankruptcy chapters. The main consideration in the beginning is which chapter the debtors will qualify for.
A Chapter 7 is sometimes called the “total liquidation” bankruptcy. Before qualifying for a Chapter 7, a debtor must take the “means test.” If the debtors’ income is under the median income for a family their size in their state, they will qualify for a Chapter 7. If it is not, more calculations are performed. If there is not enough “disposable” income left after all the debtors’ expenses are calculated, they may file Chapter 7.
All of the debtors’ assets are then liquidated and the debtors are given a fresh start. They will, however, be allowed to keep certain property and automobiles.
If the debtors are unable to pass the means test, they must file Chapter 13. The bankruptcy trustee contacts each of the debtors’ creditors and works out a figure that the debtors will pay back. All the debts are combined into one payment to the trustee who, in turn, pays all the creditors. Chapter 13 repayment plans last from three to five years.
The bankruptcy attorney Omaha at Skrupa Law Office will be able to help debtors through this difficult time in getting a new financial start.
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