When you file for bankruptcy there is one decision to make. You need to evaluate your financial situation and determine whether you can afford to repay your debts over time or if it you need to have the debt eliminated completely.
Choosing Between Chapter 7 & 13
You will need to consider a few things when deciding whether to file a Chapter 13 or 7 bankruptcy request. Chapter 13 bankruptcy is designed to help reduce the burden and allow people to recover from debt by reducing payment plans. Chapter 7 bankruptcy is designed to wipe out your debts completely, so long as they meet the eligibility requirements. You can only decide through a thorough assessment of your financial situation or having a qualified bankruptcy attorney.
Chapter 13 Bankruptcy
This form of bankruptcy is usually associated with 3-5 year repayment plans. The plan they custom design for you will be designed to suit your income and repayment ability. If you want to update your mortgage, this is the best option. It can also help you to keep your car in the event of bankruptcy. This plan will help you to reduce the principal value of the vehicle based on the span of time that you owned it. Other qualifying debts include alimony, child support payments, and IRS debts.
Chapter 7 Bankruptcy
In the event that you don’t qualify for Chapter 13, and end up with debt that is ineligible for discharge, or property that isn’t exempt, consider Chapter 7 bankruptcy.
If you do not qualify for Chapter 7, have non-exempt property you want keep, or have debts not eligible for discharge, this type of bankruptcy can help. Some of the key points of the Chapter 7 system are that it will help to eliminate unsecured debt, such as medical expenses, loans, credit card payments, and several others.
No matter which you choose, with careful evaluation, you will be able to help your financial situation to become easier to deal with.