Declaring yourself bankrupt is a very difficult task, but choosing between the chapters of bankruptcies is even more difficult. In most cases, the choice is not yours so it is better to let the court decide. But ask your bankruptcy lawyer from Walker Law to guide you about the legal technicalities of both chapters.
For the most part, debtors opt for Chapter 7 bankruptcy as it is comparatively easier.
Every debtor doesn’t qualify for Chapter 7 and it is essential to evaluate the requirement for selecting the chapter. Current financial status should be closely analyzed and the lien should also be evaluated.
The benefits of each chapter are described below so you can easily select the chapter than can effectively and accurately serve the purpose of filing your bankruptcy case.
Benefits of Chapter 13 Bankruptcy
It is commonly known as the plan for wage earners as it helps individuals repay a part of the debt in case of regular income. In this case, the repayment plan is proposed by debtors to make it possible to repay the debt in a 3 to 5 year time span.
1. Decreased Chances of Foreclosure
Chapter 13 significantly decreases the chances of home foreclosure and the proceedings of foreclosure can be stopped. The payment of the mortgages is disbursed over a period of time and the individual makes monthly payment to the trustee.
2. Credit Report
This chapter is shown on the credit report for 7 years and its impact is comparatively mild. In case of applying for rent, vehicle financing, and credit cards, a credit report is necessary. A credit report is closely inspected prior to the financing and renting of vehicles and homes, but you can still get both if you have filed for Chapter 13.
3. Additional Benefits
Chapter 13 can be regarded as a consolidation plan that can be returned in the time span of five years and this factor can decrease the overall rate of payments. Chapter 13 also helps the debtor in rescheduling the debts by shaping them according to the plan.
Benefits of Chapter 7 Bankruptcy
Chapter 7 bankruptcy, in a nutshell, allows debtors to repay their debt and initiate a new life plan. It is commonly known as straight bankruptcy or liquidation of assets. Here are the advantages of this chapter:
1. Instant Payoff
The total debt is paid in the period of 3 to 6 months and the debtor is free from the demands of creditors. It is also considered as an effective mean to repay loans and gain freedom from any kind of debt.
2. Alimony and Child Support
Family court, if applicable, will relax any alimony and child support you may be obligated to. You will still have to pay them, but the procedures and the total amount will be relaxed. In some cases, the period of this payment will be extended. A divorce lawyer can help.
3. A Fresh Start
Filing for Chapter 7 bankruptcy is a fresh start in itself and it is important to measure recent financial risks and decisions.
4. Unspecified Amount of Debt
Unlike Chapter 13 bankruptcy, Chapter 7 does not specify the limit of the debt amount so you can file for this chapter without hesitation or difficulty.
In order to file for bankruptcy, it is essential to evaluate the chapter which suits your purpose. For this reason, it is better to take the legal advice. Our attorneys are experienced in bankruptcy cases; you can contact them at 561.689.1512.