Understanding Chapter 7 and Chapter 13 Bankruptcy for Debtors in Fairfield, CA

In the realm of bankruptcy, two prominent options stand out for individuals grappling with debt: Chapter 7 and Chapter 13. Each serves a unique purpose on the path to financial recovery. Our team at Liviakis Law Firm is equipped to guide Fairfield, CA debtors through the complexities of both. Let’s take a closer look at these bankruptcy types.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy, often referred to as “liquidation bankruptcy,” eliminates most unsecured debts such as medical bills and credit card balances. It entails liquidating non-exempt assets to pay off creditors, which is managed by a trustee appointed by the bankruptcy court. It is crucial for debtors with little to no disposable income. One major advantage of Chapter 7 is the relative speed at which your debt can be discharged, typically within three to six months.

There are eligibility requirements to file for Chapter 7 bankruptcy. Debtors must undergo a “means test,” an analysis of income and debts to confirm that repayments are genuinely unfeasible. Any form of fraud or dishonesty during these tests can lead to serious repercussions.

Chapter 13 Bankruptcy

Chapter 13, otherwise known as “reorganization bankruptcy,” is designed for individuals who possess the income to pay off at least a portion of their debts through a repayment plan. The length of the repayment period is determined by the debtor’s income, typically spanning three to five years. This type of bankruptcy is fitting for those with significant assets they wish to keep and can help prevent foreclosure on homes.

Much like Chapter 7, Chapter 13 comes with its own eligibility prerequisites. Debtors must have a regular income and their unsecured and secured debts must fall within the specific limits set by federal bankruptcy laws.

Choosing Between Chapter 7 and Chapter 13

The decision between Chapter 7 and Chapter 13 bankruptcy often depends on the individual’s financial circumstances. Chapter 7 is typically sought after by those with lower income levels and few assets. On the other hand, Chapter 13 appeals to debtors with a steady income who wish to keep their assets and handle their debt over several years.

Choosing the right form of bankruptcy can be overwhelming and complex. The assistance of a knowledgeable Fairfield bankruptcy attorney is invaluable in navigating this process. At Liviakis Law Firm, our team is committed to providing the necessary guidance to help residents of Fairfield, CA, through this challenging time.

Conclusion

Bankruptcy is more than just a legal matter. It is a significant step on the road to financial recovery for many individuals. While both Chapter 7 and Chapter 13 bankruptcy offer viable options for debtors, the choice between the two depends solely on the individual’s financial circumstances. Legal assistance can make all the difference in navigating this often complicated and stressful journey. At Liviakis Law Firm, we stand ready to offer our assistance when you need it the most.