Chapter 7 bankruptcy is a "liquidation" type of bankruptcy where your non-exempt property is sold to pay down your debts, and most or all of the remaining debt is wiped out or "discharged". Not all debts may be discharged, and not all individuals may qualify for a Chapter 7 type of bankruptcy. Whether individuals qualify of a Chapter 7 depends on their income relative to domicile state's average income. Non-qualifying individuals may also qualify under the "means test". However, a Chapter 7 may not be the best option in all situation, especially if there is property that you want to keep. We can help you figure out which option is best for you.
Chapter 13 is a "reorganization" type of bankruptcy, which creates a 3 or 5 year payment plan which uses a portion of your disposable income to pay down some or all of your debts. With some types of property, you are allowed to pay down some of the debt and discharge the rest, however, with other types of property you must pay the entire amount of the debt. A Chapter 13 is advantageous if there is certain types of property which you would like to keep.
* The Law Offices of Austin A. Ching does not provide counsel or assistance for business bankruptcies.
The "means test" is used if you do not qualify for a Chapter 7 under the income guidelines. The test looks at your income and expenses to see if you could successfully complete a Chapter 13 payment plan. Please contact us to see if you would qualify for a Chapter 7 bankruptcy.