Chapter 7 bankruptcy and Chapter 13 bankruptcy are similar in that they both offer people a fresh start and a chance to eliminate some – or even sometimes all – of their debts. The similarities between the two forms of bankruptcy generally stop there.
Choosing which chapter of bankruptcy is the better option for your situation can appear difficult, but it becomes much easier once you learn a little bit about the two.
Chapter 7 Bankruptcy vs. Chapter 13 Bankruptcy
Chapter 7 bankruptcy is much quicker than Chapter 13. Petitioners typically go through the entire bankruptcy process and come out with little or no debt within a few months. Chapter 13 bankruptcy usually takes about three to five years because it allows those who file some time to pay back what they can before discharging the rest of their debt.
Chapter 13 bankruptcy is more common among those with regular income that is equal to or above the state’s median salary, which is around $35,000 per capita. If you have a steady income, you may only be eligible for Chapter 13, which requires you to pay back some of your debt.
It is possible that you may have to give up some of your possessions in Chapter 7 bankruptcy, but it is actually more common that petitioners never give up anything at all. Most people who file Chapter 7 bankruptcy have little valuable property to begin with, and using the numerous exemptions available will typically protect most or all of your possessions.
Perhaps the biggest drawback of Chapter 13 bankruptcy is that most petitioners do not finish their payment plans. If you don’t finish your repayment plan, there is a chance that the court will revoke your right to discharge any remaining debts. You could wind up in a worse position than when you started.
For more information on bankruptcy, or to discuss any options that may be available to you, call or fill out an online form today for a free consultation. The Manalapan bankruptcy lawyers at Garland & Mason, L.L.C. are ready to help you find financial peace.