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Chapter 7 Bankruptcy:

Chapter 7 Bankruptcy is commonly referred to as a
“Liquidation” or “Straight Bankruptcy”.  When a petition
for Chapter 7 Bankruptcy is filed, a bankruptcy estate is
created and a bankruptcy trustee is appointed to the
case.  Also automatic stay is put in place so all collection
activity against the debtor stops temporarily.  The
assets of the debtor become part of the bankruptcy
estate and the debtor must list what assets are
exempt and why they are exempt.  The remaining
assets are surrendered to the bank trustee for
liquidation.  A meeting of the creditors is held where the
bankruptcy trustee asks questions of the debtor.  Also,
creditors may attend this meeting to hear what the
debtor has to say.  If there are no objections, the Court
will enter an order discharging some debts.  It must be
remembered that not all debts can be discharged.  
Secured debts, such as a debt secured by mortgage or
security agreement, cannot be discharged.  A Chapter 7
Bankruptcy is helpful to a person because it stops
collection calls and discharges debts that the person
cannot pay.  It may help a person in foreclosure
because (1) it may free up some funds to help make the
mortgage payment, or (2) it may temporarily stop the
foreclosure case and give additional time to try to work
out a settlement with the lender.
The Thorpe Law Firm
(813) 933-5051  
7819 North Dale Mabry Highway, Suite 108, Tampa, FL 33614
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Chapter 13 Bankruptcy:

Chapter 13 Bankruptcy is commonly referred to as a “Reorganization”.  Just like a Chapter 7 Bankruptcy,
when a petition for Chapter 13 Bankruptcy is filed a bankruptcy estate is created and an automatic stay
is put in place so all collection activity against the debtor stops temporarily.  A bankruptcy trustee is
appointed and a meeting of the creditors is held.  However, in a Chapter 13 Bankruptcy the debtor must
file a reorganization plan with the Court.  A reorganization plan basically set forth how the debtor
proposes to restructure and pay his debts within the next 36 or 60 months.  Also, with a Chapter 13
Bankruptcy some unsecured debts may be partially discharged.  If there are no objections to the
reorganization plan, the Court will enter an order confirming the plan.  A Chapter 13 Bankruptcy is helpful
to a person because it gives them a chance to restructure their debt in a fashion to they can afford.  Also,
it may be helpful to a person in foreclosure because (1) it may free up some funds so they can afford to
make the mortgage payment, and (2) it may give you 36 to 60 months to pay the mortgage arrearage.