Filing For Chapter 7 Or Chapter 13 Bankruptcy
Filing for bankruptcy is an important decision that can help you avoid years of financial stress and can help you regain control over your finances and your life. When filing for bankruptcy, the most common type of filing is Chapter 7 or Chapter 13.
Our experienced bankruptcy attorneys at Reveille Law, P.C., can help determine which course of action is best for you. Both types of bankruptcy have specific eligibility requirements and timelines, and we can help you make an informed decision before you file.
Chapter 7: Getting Rid Of Your Debt
Chapter 7 bankruptcy allows the debtor to discharge or wipe out most or all of their debt, including medical bills, collection amounts and credit card debt. Chapter 7 would require you to sell off certain assets to repay your debts and creditors. This option is available to both businesses and individuals. Still, to qualify, you must meet the Chapter 7 means test to determine your monthly disposable income. If your disposable income is low enough, you are eligible for Chapter 7 bankruptcy.
Reveille Law, P.C., can help you gather all the documentation you need to start a Chapter 7 filing. This filing usually includes placing all your nonexempt property into a trust, which has the authority to sell all this property to repay your creditors.
Chapter 7 moves much faster than Chapter 13 and gives you an opportunity for a new start within a few months of filing, with the drawback of liquidating a large portion of your property. Chapter 7 is typically more suitable for simple and low-income bankruptcies.
Chapter 13: Catch Up On Your Debt
Only available to individuals, Chapter 13 allows the debtor to pay off a portion of their debt over time under a reorganized payment structure. Chapter 13 does not provide debt relief as quickly as Chapter 7 but allows you to keep most of your property and assets.
If you qualify for Chapter 13 bankruptcy, you can lower the principal owed on secured debts and may also be eligible to have unsecured junior liens from your property stripped. You must submit your scheduled repayments to your designated trustee on time during the repayment term.
The main drawback of Chapter 13 is that you will need to make monthly payments until you complete your repayment term, which is usually three to five years. These monthly payments take away from your disposable income and can take a long time to complete. Chapter 13 is often best for people who need extra time and flexibility to catch up on missed payments.
Which One Is Best For You?
The first step in determining which filing option is best for you is whether you are eligible for both options. Depending on the amount of debt you owe and your financial circumstances, you may not have a choice as to what type of filing option you can choose.
If you intend to pursue bankruptcy, it is essential to work with an attorney who has experience with both types of filings and can help you determine your eligibility and which option would be more beneficial for you. Contact our bankruptcy attorneys at Reveille Law, P.C., by phone at 916-975-0013 or online to schedule a consultation.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.