Each case is different. Under Chapter7 bankruptcy, the debtor gets a fresh start. Under chapter 13 bankruptcy, the creditors get paid a certain percentage on the dollar over a three to five-year payment plan.
The reason why one person would have to back a creditor and another would not is based on equity, income, assets and liabilities. Let’s take the case of someone who has disposable income per month in excess of their expenses. That person is typically going to be required to file a chapter 13 and put all of his or her disposable income each month towards a chapter 13 repayment plan which could last anywhere from 3 to 5 years. If, on the other hand, you have someone who does not have available money per month and who does not have much in the way of assets, then chapter7 fresh start is most likely going to be the best bet.
Each case has to be looked at under its own facts. Some people have assets, some people do not. Some people have significant income, others do not. Some people are just breaking even each month; other people have disposable income per month but might have fallen behind due to illness, injury, job loss or divorce.
Your attorney will be able to interview you, gather the information necessary to make a determination as to whether or not you qualify for the fresh start Chapter7 or whether or not you need to file a chapter 13 to repay all or a portion of your debt over time. You should have your income and expenses readily available when you meet with your attorney. Your attorney will also want to see a paycheck stub and will also interview you with regard to what kind of property you have in terms of real estate, vehicles, bank accounts and more.
