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Chapter 7 or Chapter 13 Bankruptcy – the Basics


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Since 1989, Michael Vereen has maintained a private law practice in Canton, Georgia. Currently, Michael Vereen focuses on bankruptcy law.

Individuals typically file for bankruptcy under the framework of Chapter 7 or Chapter 13. One chapter may be more appropriate than the other, depending on the filer’s assets, debts, and financial needs, though income plays a significant role in determining which option is available.

Individuals who wish to file for Chapter 7 bankruptcy must complete a standardized means test. This examines the person’s financial records to determine whether disposable income falls above or below a specified level. Similarly, Chapter 13 bankruptcy is available only to individuals whose secured and unsecured debts do not exceed legal maximums.

Individuals must also consider their end goals when they choose a bankruptcy framework. Chapter 7 requires the filer to surrender all nonexempt assets, which a named trustee distributes to creditors. After this process concludes, most existing debts are discharged and responsibilities to creditors cease.

Chapter 13 allows filers to retain their assets, though they remain responsible for all or a part of their debts. Debt payment follows a court-determined payment plan, the completion of which prompts the court to order a discharge of debts.

Michael Vereen, Attorney at Law, (770) 345-9449, vereenlaw.com