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Chapter 7 vs. Chapter 13 bankruptcy

April 13, 2012 by · Leave a Comment 

In difficult economic and employment environment, more and more people are defaulting on repayment of their debt. If you are using your credit card to pay for your food and mortgage, this is a sign that you are in financial difficulty. If you have done everything to get back your financial health and nothing worked, filing for bankruptcy may be an option.

The Chapter 7 of the Title 11 of the United States Code is commonly known as the bankruptcy code. This is a liquidation process of your debt and most types of unsecured debt can be wiped out. The U.S. residents can file for relief in federal court.

Chapter 13 is debt consolidation in order to significantly reduce your debt load. Instead of a total debt wipe out under Chapter 7, here you will be able to cut your debt in half or less. Additionally, you will be able to eliminate paying interest on your credit card balances. Chapter 13 also may be a vehicle to save your home and bring your mortgage current if you are in foreclosure. It may also help you to wipe out a second mortgage on your home. Consult an attorney for advice.

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