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What are the Two Types of Personal Bankruptcy?

In most cases, you can file Chapter 7 bankruptcy once every eight years.
In order to file a Chapter 7, you must meet specific income requirements. If your income exceeds your state's annual household median income and you can make payments of at least $100 a month for a period of five years, you will be forced to file Chapter 13.
You must also be current on your home and car payments if you choose to keep them. If you are behind, a Chapter 13 might be better for you.
After submitting paperwork and a report about your debts to the court, a bankruptcy trustee will be assigned to the case. You will be required to attend a short "meeting of creditors." Despite the name, creditors rarely show up in person. At the meeting, you will be asked a series of standard questions about your filing by the trustee. In most cases, you can keep the property you put up as collateral by paying the creditor the amount owed. If you are current with your payments on a secured loan, you can elect to deal with the secured debt outside the bankruptcy through a reaffirmation agreement. If the court agrees, you keep the property as long as you keep up the payments. If no one objects to your discharge (objections are rare), you will receive your discharge order in the mail in three to five months, and you will never have to pay those debts again.
Under Chapter 13 bankruptcy, you propose a plan to repay your creditors over time. A Chapter 13 filing will allow you to catch up on your mortgage or car loan payments. If you are behind on your mortgage or car payments, owe federal taxes (some tax debt cannot be discharged), or have substantial nonexempt property and have a good source of future income and want to pay off your debts, then a repayment plan might interest you. Under a Chapter 13 plan, you repay your debts by making monthly payments to the bankruptcy trustee for a minimum of three years and a maximum of five years. Your initial filing requires you to present the court with a plan for repaying your creditors. A trustee is appointed and in most cases, you must begin making payments under the plan within 30 days of filing. Following the meeting of creditors, a confirmation hearing is held. When you have completed the repayment plan, you will receive your discharge and the case will be formally closed.

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