Chapter 13 vs. Chapter 7 Bankruptcy

When someone considers filing for bankruptcy, the question as to whether to file for Chapter 7 bankruptcy or Chapter 13 bankruptcy almost always comes into play. In order to understand which type of bankruptcy will best serve your needs, it is crucial to understand the differences between the two. Knowing the differences between Chapter 7 and Chapter 13 bankruptcy can help you determine which option is best for you.

Debt Elimination vs. Debt Repayment

Chapter 7 bankruptcy eliminates unsecured debt. This type of bankruptcy is usually an easier process. Not everyone, however, can qualify for Chapter 7 bankruptcy. On the other hand, Chapter 13 bankruptcy provides you with a repayment plan where your debts are repaid according to the schedule set forth by the bankruptcy.

Who Should File for Chapter 13 Bankruptcy?

While it may be more appealing to file for Chapter 7 bankruptcy as it wipes out all of your debt rather than having you repay it, a Chapter 13 is the best course of action in some cases because you will be less likely to lose your home, car, or other possessions. If the following conditions apply to you, you are better suited for a Chapter 13 bankruptcy versus a Chapter 7:

  • You do not qualify for Chapter 7 bankruptcy
  • You want to repay your debt
  • You own a home that you wish to save
  • You own cars that you do not want to see repossessed.
  • You want to keep property that is not exempt from the Chapter 13 bankruptcy laws.
  • You have nondischargable debts such as condominium fees, court costs, and marital debts.
  • You have a co-debtor

On the other hand, if the above do not apply to you, Chapter 7 bankruptcy may be the best course of action. If the following apply to your situation, you may be best suited for Chapter 7 bankruptcy:

  • You are unable to pay your debt even if a repayment plan is established
  • You need fast relief from creditors
  • The majority of your debt is dischargeable

How to Get Help Filing for Bankruptcy

If you need to file bankruptcy, you will want to meet with an attorney who specializes in bankruptcy law. A bankruptcy attorney will be able to help you determine which type of bankruptcy is most appropriate for your individual situation and will be able to file for bankruptcy on your behalf. He or she will guide you through the bankruptcy process. Most bankruptcy attorneys accept payment plans, making it easier to obtain the help you need immediately rather than waiting to save up for the entire cost of the bankruptcy. Since each bankruptcy case is different, you will need to meet with a bankruptcy attorney to determine exactly how much your bankruptcy will cost and what payment options are available to you.