Chapter 7 Bankruptcy vs. Chapter 13 Bankruptcy
Which Bankruptcy Chapter May Be Right for You?
Personal Bankruptcy Attorneys
If you are considering filing bankruptcy to help free yourself from debt, you may know that the U.S. Bankruptcy Code offers different options.
Chapter 7 bankruptcy and Chapter 13 bankruptcy provide two types of protection for people in different financial circumstances.
In order to decide whether Chapter 7 or Chapter 13 is right for you, you'll need to understand a little about these two types of bankruptcy. Below, you'll find some helpful introductory information.
A local bankruptcy lawyer can give you much more information about Chapter 7 and Chapter 13 bankruptcy and be your guide through the process. Connect with a bankruptcy lawyer near you today who can evaluate your case-simply fill out our free case evaluation form or call 877-833-2410.
Chapter 7 Bankruptcy - Relief from Credit Card Debt
Chapter 7 bankruptcy provides many people with complete freedom from credit card debt, overdue medical bills, payday loans and other unsecured debts. Filing Chapter 7 bankruptcy might allow you to discharge unsecured debts to wipe the financial slate clean and make a fresh start in as little time as a few months.
Chapter 7 bankruptcy is often called "liquidation" because the bankruptcy trustee has the option of selling or liquidating any non-exempt assets in order to partially repay creditors.
However, liquidation doesn't actually happen very often. Many people who file Chapter 7 bankruptcy are relieved to find that they do not have any non-exempt assets and are able to keep all of their property.
Chapter 7 bankruptcy is often appropriate for people who have:
- fairly little property except basic necessities like furniture and clothing;
- little to no money left after paying basic monthly expenses; and/or
- not enough money to cover monthly expenses each month.
Chapter 13 bankruptcy is often the answer for people with:
- a lot of equity in a home or another piece of real estate or property; and/or
- a regular income and the ability to pay living expenses, but have fallen behind on debts.
Chapter 13 Bankruptcy - Structured Repayment of Debts
Chapter 13 bankruptcy offers a "reorganization" of debt. This means a payment plan to catch up debts over time, without pressure from creditors.
In most Chapter 13 bankruptcy cases, an automatic stay is entered immediately, stopping foreclosure actions, vehicle repossessions and other collection efforts. Then, a plan is developed to allow you to catch up on payments over a three-to-five year period.
Generally, Chapter 13 bankruptcy is an option for people who have regular income and the ability to pay current bills on time, and have unsecured debts of less than $336,900 and secured debts below $1,010,650.
Chapter 13 bankruptcy is often appropriate for people who have:
- a lot of equity in a home or another piece of real estate or property
- a regular income and the ability to pay living expenses, but have fallen behind on debts.
- few credit cards, medical bills and other unsecured debts.
Advantages of Filing Chapter 7 or Chapter 13 Bankruptcy
While Chapter 7 and Chapter 13 both can offer the powerful protection of the automatic stay, there are several distinct advantages to each of these consumer bankruptcy options.
Chapter 7 bankruptcy advantages may include the promise of a clean slate through the complete discharge, or elimination, of most debts, and a quick resolution.
Chapter 13 bankruptcy advantages usually include the ability to protect property, a realistic schedule to catch up on past-due accounts (typical Chapter 13 bankruptcy repayment plans last 3-5 years), and protection for co-signers, such as parents or other relatives.
Ready to get started on the road to freedom from unmanageable debt and creditor harassment? Contact a local bankruptcy lawyer. Your lawyer can expand upon the general information you have just read and discuss with you whether Chapter 7 or Chapter 13 bankruptcy is the best fit for your life.
To get in touch with a bankruptcy lawyer in your area who can evaluate your case, simply fill out our free bankruptcy case evaluation form or call 877-833-2410.