Bankruptcy FAQ: Chapter 7 v. Chapter 13

Which One is Right for Me?

If you are dealing with a significant financial debt, remember: you do not have to face this burden alone! With the help of an experienced professional trained in every aspect of bankruptcy law, you can make the best decision for you and your family to start fresh – without the crushing weight of debt on your shoulders. Although it can seem frightening, filing for bankruptcy is an incredibly common and easy way of fighting your way out of debt.

When we are dealing with clients seeking to ease their financial burden, one of the most common questions is whether or not the person should file under Chapter 7 or Chapter 13. The only honest answer, unfortunately, is that it depends on your personal situation. Before coming to a decision, it is imperative that you seek help from a qualified bankruptcy attorney to guide you through the steps you'll need to take to determine the best outcome.

Chapter 7 – Liquidation

A Chapter 7 debt relief petition is the most common form of bankruptcy in the United States. In 2011 alone, more than a million people filed under Chapter 7. Part of the reason this form of debt relief is so common is because, often, it is the most simple. During this process, a review of your assets and property is completed, and your possessions are divided into two categories: exempt, and non-exempt. Exempt items generally include: your house, a single vehicle, tools you need for work, clothing, furniture, etc. Once this is finished, any non-exempt assets you possess are seized by the court and liquidated to pay off a portion of your eligible debt.

After this process is over, which usually takes just a few months, your remaining eligible debt is waived and you are free to start fresh! You may wish to apply under Chapter 7 if you have little disposable income, do not have a regular paycheck, or have few valuable assets to your name. If you do have property you wish to protect, you may be better off making a different filing.

Chapter 13 – Debt Reorganization

If you have significant assets that you do not wish to be seized, or if you do not qualify for Chapter 7 under the means test, this petition is for you. Under a Chapter 13 filing, your income and debt is analyzed by a trustee, who then creates a repayment plan designed to span several years. All of your outstanding debt is reorganized into a single monthly payment based on your current income levels. After the plan is complete, any remaining debt is considered nullified. This may be a better choice for you and your family if you have fungible assets such as a second car, multiple properties, or significant luxury items that would be repossessed under debt liquidation.

A Bankruptcy Attorney Is Here To Help

Remember, you are not alone in fighting against predatory creditors! With the help of the attorneys at Price Law Group, we can fight on your behalf to end harassment and guide you through the process of beating your debt. Speak with the legal team at our firm, or visit our website at http://www.lasvegasbankruptcylawfirm.com to discuss your finances with a trained professional. Do not wait until it is too late!