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 Bankruptcy is intended to give people a fresh start free of debt.  In bankruptcy a person either gets released from their dischargeable debts (Chapter 7) or is allowed to reduce their debts to a manageable level and maintain a payment plan (Chapter 13). 

 CHAPTER 7

The goal of a Chapter 7 bankruptcy is to wipe out ("discharge") your debts. 

If you make more than the median income based on household size, you will have to contend with the "means test" to determine if you can receive a Chapter 7 discharge or would be better suited to file a Chapter 13. 

The means test below is a basic test to see if you may qualify for a Chapter 7;

• Family of one: $53,315
• Family of two: $69,204
• Family of three: $82,297
• Family of four: $99,293
• Family of five:$106,793
• Add $6,900 for each family member above four.

CHAPTER 13

Bankruptcy under Chapter 13 allows you to create a plan which you will pay into on a regular basis. Initially, a Chapter 13 bankruptcy sounds less attractive than a Chapter 7 filing: Chapter 13 requires you to pay into a plan whereas a Chapter 7 just wipes out your dischargeable debts. In some cases a Chapter 7 filing will be more advantageous. However, Chapter 13 has many benefits.  Some are:

• It can be used to defend against foreclosure, allowing someone to make payments over time to get current.
• No property is taken by the court
• Chapter 13 payments are often affordable, often being a very small percent of the full price billed amount. 

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