When filing for bankruptcy you’ll have the choice of filing a chapter 7 and a chapter 13 bankruptcy. A majority of people choose to file for chapter 7 bankruptcy as that discharges almost all unsecured debts. It is also a fact that while chapter 7 bankruptcy uses assets that are non-exempt under the state law to pay back your creditors, many consumers filing for chapter 7 bankruptcy are able to retain most of the assets. The assets that are exempt or protected from the used by the court to pay the creditors depend upon the state law and are decided by a person appointed by the court. These exemptions usually include household furnishings, clothing is, tools you need to work, retirement accounts and some or all of the equity in your home.
If you want to keep the property that isn’t exempt under the chapter 7 bankruptcy state laws you can still file for bankruptcy but you will have to choose a chapter 13 bankruptcy. Chapter 13 bankruptcy requires the debtor to come up with a repayment plan that will be approved by court. The debtor will make the payment to court the next 3 to 5 years to pay off his debt at the end of which the bankruptcy be discharged.
New bankruptcy law has brought about certain changes to both chapter 7 and chapter 13 bankruptcy filings. People filing for a chapter 7 bankruptcy now need to undergo a means test. This test is to a certain whether there family income is less than the state mean income of the family of that size in that particular state. If a person fails the means test he cannot file for chapter 7 bankruptcy. Both chapter 7 and chapter 13 bankruptcy require a person to take credit counseling with a minimum of two are financed management course not later than 180 days before filing.