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Should You File for Chapter 7 Bankruptcy or Chapter 13 Bankruptcy?

Chapter 7 bankruptcy and Chapter 13 bankruptcy are two common legal options with different consequences, but both are helpful for borrowers who have accumulated too much debt. Chapter 7 ba

Chapter 7 bankruptcy and Chapter 13 bankruptcy are two common legal options with different consequences, but both are helpful for borrowers who have accumulated too much debt. Chapter 7 bankruptcy can help clear some or all of the debt. However, if you file for this type of bankruptcy, you will have to surrender assets such as cash or property. Chapter 13 bankruptcy helps you get some of the debt discharged, but you get to keep your property, and you can repay your debts through a repayment plan. If you have accumulated too much debt and want to file for bankruptcy, you would want to determine which type of bankruptcy would be right for you. We will help you with this.

Should You File Chapter 7 Bankruptcy

If you have very little disposable income, you could consider filing for Chapter 7 bankruptcy. Here are a few things that you should consider if you are struggling to decide whether you should file for Chapter 7 bankruptcy or not.

·         Less Debt-Repayment Load

Chapter 7 bankruptcy discharges some or all of your debt. This means that you won’t have to pay money towards credit card bills or loans, and you can use that cash for other things such as basic household expenses.

·         Relief from Collectors

If you are struggling to pay your debts, Chapter 7 bankruptcy can stop debt collectors from taking any legal action against you. When you file for Chapter 7 bankruptcy, some of your creditors would be restricted from contacting you, collecting cash from you, continuing wage garnishment, and starting lawsuits against you.

·         Loss of Assets

One of the major consequences of filing for Chapter 7 bankruptcy is the potential loss of assets. You might have to give up your property or cash, depending on the laws in your state.

Should You File Chapter 13 Bankruptcy

If you want to keep the property that you own, Chapter 13 bankruptcy might be a better option for you. Here are some things that you should consider to determine whether Chapter 13 bankruptcy is right for you or not.

·         Repay the Debt

Chapter 13 bankruptcy can help you repay your debt in a more cost-effective and convenient way. Through it, you will create a plan to repay some or all of your debt. You can make monthly payments towards all your debts based on the repayment plan. Your monthly payments might be reduced, which would make it easier for you to repay them.

·         Discharge Your Debts in Three to Five Years

With Chapter 7 bankruptcy, your debts will be discharged quickly, but this doesn’t happen with Chapter 13 bankruptcy. Under Chapter 13 bankruptcy, your debts won’t be discharged until the completion of the repayment plan, which generally takes about three to five years.

·         You will have to file for Chapter 7 Bankruptcy if You Have Sufficient Income

You will only qualify for Chapter 7 bankruptcy if you can prove that you don’t have the money to repay your debt. If you have sufficient income, then you won’t be able to file for Chapter 7, and Chapter 13 bankruptcy will be your only option.

Final Thoughts  

Bankruptcy is a very important decision with some serious consequences. You should consider your options and determine whether you should file for Chapter 7 bankruptcy or Chapter 13 bankruptcy.