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Differences between Chapter 7 and Chapter 13 bankruptcy

Whenever an individual is overly burdened by debt, their entire world can often seem to have lost all appeal. Every aspect of life may be distorted by the idea that life may never be enjoyable again due to the fact that every financial resource is already spoken for. However, there may be relief from crippling debt in the form of a bankruptcy filing. Some individuals and families in Washington may benefit from a more thorough understanding of some of the classifications of these types of debt relief.

There are two types of personal bankruptcy filings that are used most often for consumers: Chapter 7 and Chapter 13. The first is often chosen when the main objective is to discharge qualifying debt. This filing typically allows the petitioner to be relieved of unsecured obligations such as credit cards, private loans and medical bills. There are other types of debt that may also qualify, although student loans and government taxes are generally not subject to being discharged, nor are child or spousal support payments. However, this type of filing could also result in the loss of possessions that the filer wants to retain, including a home.

For those who are seeking relief from debt but wish to repay as much as possible -- and keep their home -- a Chapter 13 filing may be appropriate. This option allows the consumer to submit a repayment plan for approval by the Bankruptcy Court, and it forestall a bank foreclosure if one is pending against the home. The plan is administered by a court appointed trustee and can be extended out as long as five years. This option may also provide protection for any co-signers of a loan from any actions by creditors or banks to seek re-payment from them.

For a family struggling to keep a roof over their heads while juggling a heavy burden of debt, a bankruptcy filing may be the best option for a brighter future. There are many resources available that can provide information to those Washington families that may benefit from learning more about securing a better grip on their financial future. Being able to view life through a better monetary situation might mean the difference between enjoying life and struggling with bills that can make the future appear uncertain.

Source:, "The Different Degrees of Bankruptcy, Explained", Lynnette Khalfani-Cox, June 19, 2014

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