Determining whether to file Chapter 13 or Chapter 7 bankruptcy can be a difficult decision. Much of the determining factor is whether or not you can afford the Chapter 13 repayment plan.
Chapter 13 is the bankruptcy filing that is used by people who have regular income, though it may not be enough to fulfill your current monthly obligations. Chapter 13 allows people to get a repayment plan for their debts that they can manage on their current income. In most cases, you’ll repay less than the total you owe.
Bankruptcy 13 can be a better choice because, provided you stick to your Chapter 13 repayment plan, you can keep your home and more assets than would be allowed under Chapter 7.
Chapter 7 is Not the Easy Way Out
Many people prefer Chapter 7 bankruptcy because it is a complete forgiveness of debts. However, when you file Chapter 7, far more of your assets will be lost. If you can afford a Chapter 13 repayment plan, you’ll likely be happier with the outcome of a Chapter 13 filing. However, for many families, Chapter 7 is the perfect option because they lack the income to afford the repayment plan that comes with Chapter 13.
Chapter 7 bankruptcy is often viewed in a more derogatory fashion than Chapter 13, too, simply because none of the debt is repaid. So, if you can afford the repayment plan, filing Chapter 13 may help you get your credit reestablished a bit more quickly.
The Court Decides
It’s also important to remember that you may not be allowed to file Chapter 7 bankruptcy if you have sufficient income to meet a reasonable repayment plan. For this reason, it’s really important to make a good judgment call about whether Chapter 13 or Chapter 7 is best for you before you file.
An Attorney is Invaluable
The best decision you can make about filing bankruptcy is to talk to an attorney first. A bankruptcy attorney can help you choose the right bankruptcy for your financial situation. And, once you’ve decided which bankruptcy is right for you, your attorney can help walk you through the entire situation to ensure that it’s done properly, according to the law. And, an attorney makes it so much easier on you, too; since he handles the paperwork on your behalf. A good bankruptcy attorney won’t make filing bankruptcy fun, but it will certainly make it easier.
