Here’s a scenario showing how Chapter 13 solves problems that Chapter 7 doesn’t solve in dealing with a creditor’s disputed lien.
For a debt to be secured, the creditor has to go through the right legal steps. Otherwise you don’t have to pay the debt.
Sometimes, even if what you bought is legally collateral on a debt, you can just write off and not pay the debt yet keep what you bought.
In general, you must include every creditor in your bankruptcy documents. Most concerns you may have about this can be satisfied.
A bankruptcy filing is a matter of public record, so anybody can find out about it. But mostly just your creditors will know.
What happens to the personal possessions and tools of trade that you gave as collateral on a loan?
Too much debt can disqualify you from filing under Chapter 13.
If you don’t qualify for either Chapter 7 or 13, do you have to do a very expensive Chapter 11 reorganization? Or could you still qualify after all?
Straight Chapter 7 bankruptcy gives very limited help if you’re behind on your vehicle and need to keep it. And Chapter 13? Provides much more help.