Should You File For Chapter 7 or Chapter 13?
Most personal bankruptcies that are filed in the United States are either Chapter 13 or Chapter 7 bankruptcies. There are many factors that tie into whether Chapter 7 or Chapter 13 bankruptcy is right for you. These factors include your income, debts, financial goals and your assets. Make sure you consult with a bankruptcy lawyer to gain more information before making your decision. First, you must know what each type of bankruptcy entails and how it relates to you.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is a liquidation bankruptcy that is designed to eliminate debts that are unsecured, such as medical bills and credit cards. You must have little to no throwaway income to be eligible. In the event that you make too much money, a Chapter 13 bankruptcy might be the better option.
You are assigned a trustee when you file for Chapter 7 bankruptcy. The trustee will administer your case. The trustee’s job in a Chapter 7 bankruptcy is to sell your nonexempt property in an effort to satisfy debts to your creditors. Chapter 7 bankruptcy is typically for low income debtors due to this. If you own no nonexempt assets then your creditors will receive nothing. It’s an ideal situation for those who cannot pay their debts down but need to erase their obligations and start fresh.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy is bankruptcy designed for those who can pay back some part of what they owe. The payment method generally involves a repayment plan. This is sometimes the only option that you have if you cannot file for Chapter 7 due to the amount of money you make. Some people choose to file for Chapter 13 bankruptcy because it offers certain benefits that Chapter 7 does not (such as the opportunity to catch up on past due mortgage payments or to unsecure liens from your house).
You get to keep all of your assets in a Chapter 13 bankruptcy, so you have no fear of losing anything to your creditors. You are, however, tasked with paying back all or a portion of your debts through a payment plan. The total amount you have to pay depends on your income, the types of debt you have and your expenses. This is the ideal situation for debtors who can afford to make payments on a monthly basis. Chapter 13 bankruptcy can actually help people catch up on missed mortgage or car payments, even pay off debts that are not dischargeable, like alimony or child support.
If you have more questions about Chapter 7 and Chapter 13 bankruptcy, do not hesitate to call us. We can provide the clarity you need and assist you in making a decision in bankruptcy that is right for you. Our consultation is free so give us a call today and take the first step towards freedom from debt.