Dealing with financial difficulties is hard enough without trying to make sense of the complicated laws that surround bankruptcy. If you are new to the concept of bankruptcy, you may be unsure of the exact meaning of terms like “chapter 7” and “chapter 13.” It is important that you understand the difference between these different types of bankruptcy if you are dealing with financial issues. Although they might seem familiar at first glance, they have different features that may make them more suitable for certain situations.
If you are feeling uncertain about which type of bankruptcy to choose, it is always a safe bet to speak with a qualified attorney. Legal experts can draw upon decades of experience and steer you in the right direction. You can also ask an attorney as many questions as you would like about the various considerations that come with declaring bankruptcy. That being said, educating yourself on these matters is never a bad move.
What is Bankruptcy?
While chapter 7 bankruptcies and chapter 13 bankruptcies are different, they also help individuals achieve the same general outcome. Choose either of these options, and you can legally get rid of your debt in exchange for accepting a few consequences.
What is Chapter 7 Bankruptcy?
A chapter 7 bankruptcy allows you to completely wipe out your debts, but only if you allow the bankruptcy court to completely liquidate your assets. Aside from a few essentials, most of your assets will be sold so that your creditors can receive something from your unpaid debts. In some cases, creditors receive next to nothing when a debtor declares chapter 7 bankruptcy.
What is Chapter 13 Bankruptcy?
A chapter 13 bankruptcy only wipes out a portion of your debts, and the bankruptcy court will still order you to pay off the remainder through a payment plan. Generally, you will be allowed to keep your assets if you choose a chapter 13 bankruptcy. After a period of about three to five years, your payment plan will finish and you will be granted a discharge.
Which Type of Bankruptcy Should I Choose?
A chapter 7 bankruptcy is usually the best choice if you no longer have a reliable source of income. It is also quicker to achieve for most people, and you can wrap up your bankruptcy in about three months. You may also prefer a chapter 7 bankruptcy if you have relatively few non-exempt assets. If you live in a rental property and you do not own a car, creditors cannot really take anything from you if you declare chapter 7 bankruptcy.
If you want to keep hold of important assets such as your house and car, you may be more inclined to declare a chapter 13 bankruptcy. Homeowners generally choose chapter 13 bankruptcies for this reason. It may also be a more attractive option if you need to quickly deal with issues like lawsuits and foreclosures.
Getting Legal Help
No matter what type of bankruptcy you may be considering, it is always a good idea to work with a qualified attorney who can help you tackle your financial issues with a strong degree of efficiency. While it might seem illogical to hire an attorney when you are facing serious debt, an experienced legal expert can help you save more than enough to pay your legal fees and come out on top. We are also happy to set up a manageable payment plan so you can proceed in a sustainable way. Reach out to Tyler Moore Law today, and we can help you take your next steps in a dignified manner.