Chapter 7 Exemptions and Chapter 13 Dischargeable Debts

FinanceMortgage & Debt

  • Author Esther A.
  • Published January 11, 2010
  • Word count 456

The range of exemptions is different in each Chapter and varies from state to state. What are some of the most significant and basic discharge for Chapter 7 and Chapter 13 Bankruptcy?

Chapter 7 Bankruptcy Exemptions

Chapter 7 bankruptcy also known as ‘straight’ or ‘liquidation’ bankruptcy is the means to help individual debtors clear up their debts. Most of individual debtors’ unsecured debts are dischargeable, such as utility bills and wage garnishments, personal loans, medical bills, older tax debts, judgement stemmed from car accidents; credit card, payable loans, and deficiencies on reclaimed vehicles. However, Chapter 7 bankruptcy do not discharge individual debtors on student loans, debts sustained by fraud or deliberate illegal behaviour, recent taxes, debts to partner resulting from divorce, criminal fines or reimbursements, family support and drunk driving verdicts.

In most cases, Chapter 7 bankruptcy exemptions protect all of debtor’s property. Exemptions normally take account of debtor’s tools, certain items of personal property, work equipment, residence, vehicle, and several other properties. If exemptions do not protect all of your property as required by law, the individual debtor’s court-assigned bankruptcy trustee has the power to clear up the debtor’s non-exempt debts to pay off the creditors.

Individual debtors are to consult their bankruptcy lawyer about their state’s exemptions.

Chapter 13 Bankruptcy Exemptions

In Chapter 13 bankruptcy, debts that are not dischargeable encompass old taxes, for which no return was filed, family support, student loans, drunk driving verdicts, and reimbursements. Exemptions in Chapter 13 are similar to that of Chapter 7 with few advantages as well. For instant, the individual debtor can enforce a ‘debt management’ plan on creditors. This plan, which halts the running of interest on credit card debt, is irreversible and must be accepted by creditors. Chapter 13 allows time for the individual debtor to pay off his or her liabilities, which is not permissible in either chapter, such as eliminating a portion of lien, curing defaults on home mortgages, and eliminating recent taxes. Chapter 13 can be regarded as a court enforced debt management plan as the discharge in this chapter covers many debts, comparing to Chapter 7.

Another important thing that you should understand when filing for bankruptcy: There is no way one can file for bankruptcy online. You can make research online to better understand how to file for bankruptcy, get an inner understanding of bankruptcy laws, or download a bankruptcy form, but you cannot apply for bankruptcy online. No bankruptcy court acknowledges Chapter 7 bankruptcy application online. If you thought you could then, you are mistaken, be prepared to take on this legal process as a physical challenge as the virtual mode is not made available yet. There are multiple sites, which will give you tips on how to file bankruptcy, or connect you with a bankruptcy lawyer.

Esther A. is a specialist in SEO copywriting. She is currently occupying the position of SEO Virtual Administrative Assistant SEO Virtual Administrative Assistant in a US based SEO copywriting company

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