This article compares the benefits of Chapter 7 bankruptcy in Indiana versus Chapter 13 bankruptcy. Both Chapter 7 and Chapter 13 can be a cost effective and powerful solution to your debt problems if you live in Indiana. Let’s discuss the differences between the two.
The most common bankruptcy remedy that our office helps people file and the greater Indianapolis area is Chapter 7 bankruptcy. Chapter 7 bankruptcy is the total elimination or “discharge” of your debts. Chapter 7 is so powerful because of the speed in which all of your debt are erased. It is the fastest way to achieve a fresh start and to get back moving in a good financial direction.
Chapter 7 bankruptcy in Indiana can also help you rebuild your credit quickly. If you have bad credit, your credit history and rating improve almost instantly upon filing Chapter 7 bankruptcy. This is because all of your bad past credit history is instantly replaced with a single entry of the date and place in which you filed the Chapter 7 bankruptcy. You will almost instantly receive credit offers in the mail for items such as automobile loans or possibly smaller balance credit cards. After two years, you will likely be able to rebuild your credit a considerable degree if you continue on making timely payments in credit accounts.
Remember, if you file Chapter 7 bankruptcy and want to keep your house and cars you will need to continue making those payments. However, all of your debts are discharged in Chapter 7 bankruptcy. That means that you will no longer be personally liable for any of your debts. Remember also that certain debts cannot be discharged in Chapter 7 bankruptcy such as recent income tax debt, child support, or student loans.
A Chapter 13 bankruptcy in Indiana is much different than Chapter 7 because it is a 3 to 5 year repayment plan that reorganizes your debts. Chapter 13 is a much different approach to debt relief than chapter 7. Instead of focusing on your assets and then discharging all of your debts like in Chapter 7, the Chapter 13 case focuses on what you are able to repay to your creditors.
Chapter 13 possesses many attributes that a simple Chapter 7 case lacks in its simplicity. Chapter 13, unlike Chapter 7, can be used as a versatile tool of debt reorganization. Chapter 13 cases are used to bring mortgages up-to-date and repay arrears. They can also bring automobiles up to date and sometimes drastically change the terms of repayment for the automobile. Chapter 13’s can also be used to avoid second and third mortgages in certain situations.
Chapter 13 cases are also used to achieve debt relief when you have either too much income or too many assets to file under Chapter 7. In addition, some Chapter 13 filers use their case to keep creditors satisfied with a lower, single payment – something much better and more organized than what could be achieved outside of bankruptcy. With almost all Chapter 13 filers, the Chapter 13 case is also used to stop aggressive collection or communication with creditors during the duration of their plan.
Although Chapter 7 and Chapter 13 approach debt relief in quite a different way, both types of filings are very powerful ways of dealing with excessive debt. Chapter 7 is simple: it quickly eliminates all dischargeable debts. Chapter 13 is somewhat more complex but much more versatile: it offers a variety of mechanisms that can reorganize your debts.
~Indianapolis Bankruptcy Attorney John Bymaster on Indiana Chapter 7 vs Indiana Chapter 13 Bankruptcy