Filing for bankruptcy is never an easy option but for some individuals, it may be the only way out of crippling debt. There are two main bankruptcy chapters, 7 and 13, that apply to individuals. Below are three reasons you may decide to file for chapter 13 bankruptcy over chapter 7.
You Don't Qualify for Chapter 7
Chapter 7 bankruptcy has much stricter guidelines to be met since many of your debts will be fully discharged under this chapter. Chapter 13, however, has less strict guidelines and makes it easier for those with a higher income or more disposable income.
Chapter 13 involves the creation of and adherence to a strict financial plan. This allows you to pay off your debts without threat of default, but it still makes you responsible for them. Because of this, chapter 13 bankruptcy can be easier to file for and receive than chapter 7 bankruptcy.
You Have Non-Exempt Property You'd Like to Keep
Chapter 13 bankruptcy is usually the best choice when it comes to keeping your property safe and out of the hands of your creditors.
There are rules and regulations for asset exemptions in both chapter 7 and chapter 13 bankruptcy, but the rules for exemption are much more favorable in chapter 13. When you file for chapter 7 bankruptcy, all non-exempt property will be sold off to pay down your debts but with chapter 13 bankruptcy, you're given the chance to pay off any non-exempt property before it's sold. As long as you have a solid financial plan in place, your payment plan should have no trouble being accepted.
You Have Debts That Cannot Be Discharged with Chapter 7
If the majority of your debts cannot be discharged, such as student loans or child support back payments, chapter 13 bankruptcy may be the only way for you to avoid default, further fines, or even jail.
With chapter 7 bankruptcy, property will be sold and your assets will be distributed to your creditors to pay your debts. You won't, however, be let off the hook for certain debts, such as the ones mentioned above. Chapter 13 bankruptcy is the only chapter that will allow you to pay off such debts to avoid the repercussions mentioned. Chapter 13 bankruptcy allows you to provide for your family while still paying off your debts in a timely manner. This is best in the long run for you and your family.
To learn more about bankruptcy, whether you qualify, and which chapter would be right for you, consult an experienced bankruptcy attorney like Wiesner & Frackowiak, LC. They can answer all of your questions and concerns while helping to make this difficult time easier on you.