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     There are two types of bankruptcies that are common for individuals. These are the Chapter 7 Bankruptcy and the Chapter 13 Bankruptcy.
 
     Both require you to file a Petition and Schedules showing your assets, liabilities, income and expenses.
 
     Both require that the debtor take a credit counseling course before filing bankruptcy and a money management course before debts can be discharged. Credit Counseling and Money Management Courses
 
    Both require an opportunity for the creditors to ask you questions called a Meeting of Creditors (341 Meeting).  341 Meeting of Creditors

Chapter 7
 
(Allows you to discharge your debt)
Time Period: 4-5 Months
 
     A Chapter 7 Bankruptcy is also called a Liquidatioin Bankruptcy. This is because the Trustee is entitled to liquidate, or sell, all of the debtor's non- exempt property to pay the debtor's creditors. Any remaining debt owed to the creditor after assets are sold and disbursed are discharged, or foregiven. There are some debts that can not be discharged such as some taxes, most student loans, child support and debts created by the borrower's fraud.

Chapter 13
 
(Requires you to pay some of your debt)
Time Period: 3-5 years
 
      You can usually keep your property, but you must earn wages or have some other source of regular income and you must agree to pay part of your income to your creditors. The court must approve your repayment plan and your budget. A trustee is appointed and will collect the payments from you, pay your creditors, and make sure you live up to the terms of your repayment plan.

     Usually, a Chapter 7 is filed by debtors who just need a fresh start by keeping the basic neccessities and discharging most, if not all, of their debts.
 
    A Chapter 13 may be filed by a debtor who needs to get caught up on a house payment but still has enough income to pay at least some of their other debts.
 
     Recent reforms in the bankruptcy law requires debtors to file a Chapter 13 instead of a Chapter 7 if there is sufficient income to pay at least something to the creditors. A test was developed to determine whether a debtor has enough income to require a Chapter 13 Bankruptcy. This test is called the "Means Test".

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