Which bankruptcy is right for me: Chapter 7 or Chapter 13?

On Behalf of | Aug 2, 2021 | Bankruptcy |

Declaring bankruptcy is a complicated legal process that affects your credit and finances for a long time.

There are different types of bankruptcy filings. It is crucial to determine the right option for your circumstances before you move forward.

What is a Chapter 7 bankruptcy?

A Chapter 7 bankruptcy is a legal liquidation that provides a way to discharge most unsecured debt. It involves selling some of your nonexempt property to pay the bills you owe. This type is a good option for people who do not have disposable income or sufficient equity to repay debts.

Some things to consider include:

  • It can reduce your monthly repayment amounts
  • It typically takes about four months to complete
  • It can stop debt collectors from contacting you
  • It remains on your credit for up to ten years
  • You may lose non-exempt assets

What is a Chapter 13 bankruptcy?

A Chapter 13 bankruptcy is a reorganization option that allows you to retain secured assets like your car or house. This type is for people who have reliable incomes. Chapter 13 requires you to create a long-term repayment plan that will pay off your debt in three to five years. You make one payment each month for distribution among your creditors.

Some key points to consider:

  • It can stop the foreclosure process
  • It helps you repay your debt
  • It may strain your monthly budget
  • It typically takes up to five years
  • It stays on your credit rating for seven years
  • It requires consistent monthly payments

Choosing to file bankruptcy is a serious decision with many financial consequences. It is critical to understand the bankruptcy laws and weigh the pros and cons of each filing type before taking legal action.

We have consolidated our offices to our Temple location and no longer conducting business at our Killeen location. Please call (254) 778-8934 for assistance.

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