Know Your Bankruptcy Options
A Chapter 7 and Chapter 13 Comparison
The U.S. Bankruptcy Code offers individuals like you two different options to address financial predicaments: Chapter 7 bankruptcy and Chapter 13 bankruptcy.
Depending on your goals, financial situation and other factors, either Chapter 7 bankruptcy or Chapter 13 bankruptcy may be a more appropriate course of action to help you address your debt.
On the surface, these consumer bankruptcy options may be just two numbers to you. If you are unfamiliar with Chapter 7 and 13 bankruptcy, and unsure about what they do, let Bankruptcy.Me help you understand these important personal bankruptcy options.
While the following information provides a nice introduction to the differences between these two forms of personal bankruptcy, getting in touch with a local bankruptcy lawyer is an even better way to learn more about Chapter 7 and Chapter 13 bankruptcy as they may apply to your situation.
Get started by filling out our the below form or calling 888-632-0587 and Bankruptcy.Me will waste no time in connecting you with a local bankruptcy attorney.
Chapter 7 Bankruptcy -- Take Charge of Your Charge Cards
If you’re overwhelmed by credit cards, medical bills, payday loans and other forms of unsecured debt, Chapter 7 bankruptcy may be able to help you get a full discharge from these debts.
Chapter 7 bankruptcy is often referred to as “liquidation” because the bankruptcy trustee in your case has the option of liquidating or selling your non-exempt assets in order to pay back some of your creditors. However, you should know that most Chapter 7 bankruptcy petitioners do not have any non-exempt assets, meaning that there may not be any sale of your items. As your bankruptcy lawyer can tell, you must pass a two-step means test in order to qualify for Chapter 7 bankruptcy.
According to the Federal Judiciary for the 12-month period concluding at the end of June 2008, Chapter 7 bankruptcy filings were up more than 30 percent as compared to the same time period for the year before; could you be another person who attains a fresh financial start by filing Chapter 7 bankruptcy?
If you have more than $8,000 in credit card debt like 1 in every 6 households in America, or if you’re struggling with other unsecured debts like medical bills or payday loans, you owe it to yourself to learn more about Chapter 7 bankruptcy and connect with one of our sponsoring Chapter 7 bankruptcy lawyers near you.
Chapter 13 Bankruptcy – Breathing Room to Catch Up on Your Debts
While Chapter 7 bankruptcy is referred to as “liquidation,” Chapter 13 bankruptcy is known as a “reorganization” of debt, meaning that you will be given time to repay secured debts (such as past-due mortgage or car payments) that may have become delinquent as a result of some sort of personal crisis.
Chapter 13 bankruptcy may help you stop home foreclosure or vehicle repossession in the form of a three-to-five year repayment plan in which you must keep current on your monthly payments and catch up over time on past-due debts.
As your local bankruptcy lawyer can examine with you in more detail, filing Chapter 13 bankruptcy may apply to your situation if you show that you have a regular income and the ability to make your payments on time and if your unsecured debts are less than $360,475 and your secured debts are below $1,081,400.
If you’re like many American homeowners who are facing the possibility of foreclosure, Chapter 13 bankruptcy may be able to help stop foreclosure.
What’s Better for You – Chapter 7 or Chapter 13 Bankruptcy?
As you’re likely wondering which of these personal bankruptcy options may be better for your needs, utilize the following checklist to gauge whether Chapter 7 or Chapter 13 bankruptcy may be more appropriate for you at this time.
You May Want to Consider...
Chapter 7 bankruptcy if you have:
- little property except basic necessities like furniture and clothing;
- little to no money left after paying your basic monthly expenses; and/or
- no money to meet your monthly expenses each month.
Chapter 13 bankruptcy if you have:
- a lot of equity in a home or another piece of property that you want to keep; and/or
- regular income and the ability to pay your living expenses, but are unable to keep up with paying your debts on time
What Does Bankruptcy Offer?
Chapter 7 bankruptcy typically offers:
- a complete discharge, or elimination, of your debts;
- a fast and timely process (your discharge may be attainable within just a few months); and
- protection from creditors, who cannot contact you during your Chapter 7 case or after your receive discharge.
Chapter 13 bankruptcy typically offers:
- breathing room to keep your home and car;
- more time to catch up on delinquent accounts (typical Chapter 13 bankruptcy repayment plans last 3-5 years);
- freedom from creditors (they cannot contact you during the 3-5 year protection period); and
- protection for co-signers.
Contacting a local bankruptcy lawyer is a smart way to go beyond the general information provided above and to further examine Chapter 7 and Chapter 13 bankruptcy as they may apply to you.
The above synopsis of bankruptcy law is by no means all-inclusive and
is not legal advice. These laws may have changed
since our last update and there may be additional laws that apply in
your situation. For the latest information on bankruptcy laws, please
contact a local bankruptcy attorney in your area.
To get in touch with a bankruptcy lawyer in your area, simply fill out our free bankruptcy case review form or call (888) 632-0587.