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Chapter 7 vs. Chapter 13 Bankruptcy

Have you found yourself buried under debt? Are you wondering whether bankruptcy may be right for you? If so, is it important you understand your options. Chapter 7 and Chapter 13 are two different types of bankruptcy that can help an individual seek the true debt relief he or she needs. Each has its advantages and disadvantages. Knowing the difference between the two will help you make the decision as to whether to file for bankruptcy and which type of bankruptcy will most suit your needs.

About Chapter 7 Bankruptcy

Chapter 7 is a type of bankruptcy most often used by individuals who do not have the financial means necessary to pay off their outstanding debt so as to get their finances in order. Individuals who want to file for Chapter 7 must first pass a means test. Those whose income is less than the median income for others in the same state will qualify for this type of bankruptcy. Those whose income is above the median, may still be able to file for bankruptcy to help them get out of debt, but it will have to be Chapter 13.

In Chapter 7, assets and certain property can be liquidated to help get debt paid, although state exemptions may help prevent an individual having to get rid of his or her home, vehicle and other valuable assets. Personal loans, credit cards and medical bills are the types of debt which can be discharged through this type of bankruptcy. Student loans, alimony payments, certain taxes, court-ordered fines and other debt cannot be discharged through Chapter 7.

Chapter 13 Overview

Chapter 13 bankruptcy is a way for an individual to consolidate all of his or her existing debt, and devise a reasonable payment plan in which this debt can be paid off within a 3 to 5 year period of time. Chapter 13 is usually a viable option for those individuals who have a certain amount of disposable income and can use that income to get their debt paid.

With the help of your attorney, you will be able to negotiate a payment plan that will allow you to make a significant dent in your outstanding debt, then possibly get the remainder discharged after the 3 to 5 year period has passed. Individuals who do not qualify for Chapter 7 may want to consider Chapter 13 as another way to reach their goal of being debt-free. This type of bankruptcy can also be a foreclosure defense to allow an individual to catch up on past due payments so as to retain possession of his or her home.

If you are considering filing for bankruptcy, the first thing you need to do is contact an experienced bankruptcy lawyer to discuss the options available to you. We are intimately familiar with all types of bankruptcy and are more than qualified to help you avoid some of the most common mistakes, so as to help maximize the benefits you stand to gain. Our lead attorney is a member of the National Association of Consumer Bankruptcy Attorneys and has a Very Good Rating on Avvo. At Dion R. Hancock, P.A., we offer a full financial evaluation without any commitment to help you determine whether bankruptcy is right for you. Call our firm to speak with a St. Petersburg bankruptcy attorney right away to get started.

Categories: Bankruptcy

The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship.