To file for bankruptcy can be a stressful ordeal. After all, this takes admitting that you are in too much debt that you can’t foresee having the ability to pay it off. When you choose to contact a bankruptcy lawyer to discuss your bankruptcy options, there are going to be two different types that you will hear the most about. These types are Chapter 13 and Chapter 7. Before you make your choice, it’s important to know that each has its own separate benefits.
Chapter 13 Benefits
Chapter 13 bankruptcy is a reorganization plan. If you have enough income every month, then you may be able to pay back your debts over time. What happens in Chapter 13 is that you are put on a new payment plan that works with your income to pay off your debts. When you file for Chapter 13, you get to keep all of your property. It does not matter what the property is. However, you will have to add up the value of your nonexempt property and pay your creditors the amount. Then, once you pay the amount, you can pay the rest in a repayment plan that you and the creditors agree upon.
Chapter 7 Benefits
Chapter 7 bankruptcy is best for those with little income and fewer assets. Under Chapter 7, you wipe out most of your unsecured debt. This applies to your credit cards and medical bills. Unlike Chapter 13, one of the major benefits is that you do not have to pay this debt back through a repayment plan. As soon as you file for Chapter 7, there is also an automatic stay order. This means that all creditors have to halt their debt collection.
You don’t lose everything with Chapter 7. You are allowed to keep your primary home, car and many other valuable assets. The only assets that you have to part with are those that are considered to be luxury items and anything that is non-exempt.
If you plan to file for bankruptcy, your income will heavily influence whether or not you can file for Chapter 13 or Chapter 7. Of course, there are a lot of other factors that may go into your decision to file for bankruptcy and which type you choose. To find out which type would best suit you, contact a chapter 7 bankruptcy lawyer as soon as possible and find out what your options are.