Deciding Between Chapter 7 and Chapter 13 Bankruptcy

Filing bankruptcy is not a quick and easy process. There are decisions that you have to make in the process that can be quite overwhelming. The complex process can be quite disheartening for someone who is in a vulnerable position and seemingly at the end of their rope.

One of the first big decisions you may have to make, when filing, is whether to go with a Chapter 7 bankruptcy or Chapter 13 bankruptcy. At RGG Law, our goal is to guide you through this inundating process and help you make the choice that will work best for your finances and your future.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy is usually the option for those with lower income or debts too large to satisfy. One emerges out of the other side of a Chapter 7 bankruptcy with no unsecured debt (leaving only secured debts, such as student loans, tax debts or child support). Because it is a “get out of debt [almost] free” card, bankruptcy law requires you to qualify for a Chapter 7 bankruptcy through a Means Test, which determines your income and weighs your ability to pay back your debt. If it is determined that you, at your steady income, cannot repay your unsecured debt, you will qualify for a Chapter 7 bankruptcy.

Chapter 13 Bankruptcy

If you file Chapter 13 bankruptcy, your debt will not be erased. Chapter 13 Bankruptcy law weighs your living expenses, priority debts, and secured debts. It determines your disposable income and then crafts a payment plan proportionate to what the debtor is able to pay. This way, some of the pressure of the debt is relieved, but assets are not liquidated and the debtor will remain responsible for owed money.

Filing Bankruptcy: What Will Best Serve You?

Chapter 7 bankruptcy is likely the best option for you if the lion’s share of your issues come from unsecured debt (i.e. credit cards) and if you meet the qualifications. Chapter 7 doesn’t discharge tax or student debt, so if large student loans are a big part of your problem, Chapter 13 bankruptcy is probably a better option for you.

RGG Law Cares about Your Future

The intricacies of Chapter 7 and Chapter 13 bankruptcy law are seemingly endless. Our bankruptcy lawyers know the ins and outs of the system, and can assess your financial situation and help guide you to the best option for your finances and your future. Don’t waste another day being bogged down with the stress of filing bankruptcy; schedule a free consultation and let us help you find relief.