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A Chapter seven personal bankruptcy is usually called a liquidation personal bankruptcy or even a “fresh start” bankruptcy. In Chapter seven proceedings, you do not pay out anything at all to unsecured creditors integrated inside your bankruptcy petition except if the court calls for a liquidation sale of the nonexempt assets. (Nonexempt assets are individuals not guarded from compelled liquidation by either federal or state statutes. If you individual property that are nonexempt, you might be required to liquidate them. The court would then distribute the proceeds in the sale in your unsecured creditors as partial fulfillment from the debts you owe. Any remaining unpaid financial debt would then be discharged, so you would not be held accountable for it.

A Chapter thirteen bankruptcy, at times referred to as a “wage-earner’s strategy,” will not need liquidation of nonexempt assets to gratify your collectors. Instead, you spend some or all of your current unsecured debt back again by way of the court about a 36 to sixty month period of time. The portion of unsecured credit card debt you’re required to repay should be a minimum of equal to what your creditors would receive if your nonexempt property ended up liquidated as portion of a Chapter seven bankruptcy. If you productively full the court-ordered repayment timetable, any unpaid unsecured debt is then discharged.