Are you looking to file for bankruptcy? Are you unsure as to which type of bankruptcy is right for you? Not many people understand the differences between Chapter 7 and Chapter 13 and they are not sure which one would be better for their particular debt situation.
To help clear up some of the confusion we are going to dig deep into varying types of bankruptcy in order to find out when Chapter 7 is better than Chapter 13. Filing for bankruptcy is a big decision so it is of vital importance that you are able to make an informed decision when it comes to filing the right bankruptcy petition for you.
Not all bankruptcies discharge debt the same way and there are different risks and benefits with each kind. Now is the time for you to learn why Chapter 7 may be the better option for you in comparison with Chapter 13.
The Benefits of Chapter 7
If you are looking for a quick resolution to your debt problem, then Chapter 7 may be the way to go. With Chapter 7 your bankruptcy case could be done within three to six months and you could be enjoying debt discharge after a short amount of time.
After just a few short months you could walk away with very little debt left to your name. Chapter 7 bankruptcy discharges the majority of unsecured debt, but there are exemptions including mortgage payments, car payments, student loans, past due child support and tax debt.
With Chapter 7 bankruptcy, there is a higher risk that you could lose property in the process, but that rarely happens. In the majority of cases, all Chapter 7 petitioners emerge from the bankruptcy with all of their assets and properties intact. The only exception would be if you used any of your property as collateral for a loan, in those cases, the creditors may be able to take it.
One major determining factor that can encourage or deter people from filing for Chapter 7 is that there is a means test that applicants must pass in order to be eligible. If your income is above the standard median, then you may not qualify. However, you can always file for Chapter 13 and pay your debt back through a repayment pan.
The Disadvantages of Chapter 13
At times Chapter 13 is your only option. However, if you qualify for Chapter 7, then that may be the better option for you. With Chapter 13, you are required to pay back your debt in small portions over time, whereas with Chapter 7 your debt is simply discharged. When you file for Chapter 13 you are given a three to five year period in which to pay back your debt and complete your repayment plan.
Once your repayment plan is completed, then the remainder of your debt is discharged. You must stay on top of your payments and complete your plan; otherwise your debt won’t be discharged at the end. Even though Chapter 13 has some disadvantages, it is still the wiser choice for some, especially if you are running the risk of foreclosure.
If you are still uncertain as to whether you should file for Chapter 7 or Chapter 13, our Tampa bankruptcy attorney is available to answer any of your questions. Here at Dion R. Hancock, P.A. we offer a free bankruptcy evaluation to all prospective clients.
We can help you figure out if you are eligible for Chapter 7 and if that is the best route for you and your family. Call to schedule an appointment today at (813) 223-4821.