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In addition to chapter 7 bankruptcy, another option for consumers to file bankruptcy is chapter 13. The biggest difference between ch 7 and ch 13 is that your property is liquidated in ch 7 in order to pay off your debts, any debts that are not paid off are then discharged. In ch 13 you create a payment plan in order to pay off a portion or all of your debts, without having to liquidate your property.

So what are the benefits of filing chapter 13 bankruptcy?

Protect Property – If you have a lot of property that would not be exempt and could possibly taken and sold in a ch 7, filing ch 13 will protect your property, including your home.

Stop Foreclosure – If you are facing foreclosure, a ch 13 can stop proceedings by allowing you to create a payment plan to repay missed mortgage payments and any legal fees that are due.

Repay Debts – If you have a moral obligation to repay your debts, setting up a realistic repayment plan can help you complete your debt obligations.

Include Attorney Fees – You can include your attorney fees for filing bankruptcy in your chapter 13 repayment plan.

Repayment plans are set up for 3-5 years, giving you a chance to pay your debts while being able to manage your other expenses. Under the new bankruptcy laws you can be forced into a chapter 13 if you have more than $10,950 in disposable income per year, or have between $6576 and $10,949, and can pay at least 25% of your unsecured debt. These numbers are determined by the bankruptcy means test.

College costs are skyrocketing, and more students are having to take out tens of thousands of dollars in student loans in order to graduate. Unfortunately, it can take awhile to land a job to repay those loans, and with the average length of student loans increasing to 10-15 years, chances are you might end up having to file bankruptcy sometime during that repayment period.

In most bankruptcy circumstances, students loans cannot be discharged. You will have to disclose your loans in the bankruptcy forms, but you will have to continue to repay them rather than having them discharged with your other debts.

There is one way to have your student loans discharged in your bankruptcy proceeding, and that is to prove hardship. You typically have to prove 3 things:

1. You’ve made a good effort at repaying the loans. Payments being made for 5 years usually show that you have attempted to repay the student loans.

2. If you are forced to repay the student loans, you will not be able to maintain a minimal standard of living, in other words, you will be living in a box and eating Ramen noodles. Of course each court can determine what “minimal standard of living” means.

3. You must prove that the financial hardship is going to continue for a large portion of the student loan repayment period. If the hardship is only a year or a few months, it’s not likely that the loans will be discharged.

You will have to petition the court during your bankruptcy proceedings that you wish to try to prove hardship and that your student loans should be discharged. Each court and trustee has different standards for the hardship, so it may be worth it to talk to an attorney to determine if its worth it to try.

Credit reports and scores are important in today’s world. Your report is often pulled when you apply for a new job, and of course it’s used for any purchases you want to make on credit such as a car or home. Keeping a high credit score is critical. So what affect does filing bankruptcy have on your credit health?

If you are thinking about filing bankruptcy, chances are you are behind on several or most of your bills. Late payments make your score drop, so you may already be suffering in the credit score department.

Depending on how many late payments you’ve had, how many credits lines have been paid on time, and how long your credit history is, filing bankruptcy coud knock 75-300 points off your score. Filing bankruptcy could make your credit score go up faster than not filing though, as your debt to income ratio will decrease once your debts have been discharged, making you a better credit risk.

Once you’ve filed bankruptcy you might be surprised to receive numerous offers for credit cards, car loans and other lines of credit. A lot of subprime lenders target recent filers with high rate offers knowing that you can’t file bankruptcy again for 7 years.