If you are getting ready to file for bankruptcy, it may be very confusing deciding which method you should use. While each method has their own benefits, here are two reasons you may consider filing under chapter 7 bankruptcy instead of chapter 13.
You Will Have A Financial Fresh Start
The main appeal of chapter 7 is how it lets you start over by eliminating many of your major debts. This includes a car payment, mortgage, credit card bills, hospital bills, and even payday advances. Unfortunately, it doesn't eliminate all debts. You will still have to pay money owed to the IRS, child support or alimony, and any student loans that you may have.
This biggest downside to filing chapter 7 bankruptcy is that you need to surrender property associated with these debts. For example, eliminating your mortgage debt means needing to surrender your home, and eliminating your car payment debt requires surrendering your car. So consider how close you are to paying off either of these big items at the time of filing for bankruptcy.
Money in your personal savings account will also be surrendered to repay the creditors you owe money to. This only applies to money you have at the time of filing for bankruptcy, and any money you earn after that time is yours and cannot be taken away.
Many people prefer Chapter 7 over chapter 13 since the latter requires repaying part of your financial debts. In bankruptcy court, they will consolidate your debts so that you have to make regular payments over several years. It may not be an option if your income is limited, or you have recently been fired from your job.
The Bankruptcy Is Processed Faster
Chapter 7 bankruptcies are processed much faster than chapter 13. Expect your chapter 7 bankruptcy to be processed in only 2-3 months. Keep in mind, the bankruptcy court may want to look into your assets further to see if you are hiding anything from them, which will extend the process.
Chapter 13 will not discharge your debts until your bankruptcy payment plan has been paid off completely. This can take many years depending on how many debts that you have. If you are unable to complete your payment plan, the debts will never be discharged.
The best way to determine what method of bankruptcy will be right for is by speaking with an attorney that specializes in bankruptcy. They will be able to advise you on which path is best for your situation.
Share25 February 2015
When I was a child, I regularly visited a local department store. At this lovely business establishment, one could purchase many items including clothing, shoes, and even hotdogs. Sadly, due to competition and other factors, the store closed its doors for the last time several years ago. If the owners of the store had considered bankruptcy options, they might still be meeting customers’ needs today. On this blog, you will learn how to resurrect your business with available bankruptcy alternatives. Regardless of whether you choose to liquidate your assets or reorganize your entity, the opportunity to remain in operation might be an option for you.