You’re considering both Chapter 7 bankruptcy and Chapter 13 bankruptcy, but you’re not sure which one is right for you. If you have assets you want to retain, while it can be done with either one, Chapter 13 may make it easier.
Keep in mind that the biggest difference between the two is that Chapter 13 creates a repayment plan. That plan typically lasts for three to five years. Chapter 7, though, liquidates unneeded assets that are not exempt. It then pays off a portion of the debt with the proceeds and forgives the rest.
There are exemptions for Chapter 7, so don’t assume that you’ll lose all of your assets. For instance, you may be able to keep tools that you need in your line of work.
However, maybe you have additional assets that you don’t want to give up, like a second car. These may be liquidated with Chapter 7, but you may be allowed to keep them with Chapter 13.
There is a stipulation: You have to make your monthly payments on time. If you fail, you could just lose your assets at a later date. As long as you pay, though, you protect what you own.
There are many things you must consider when deciding between Chapter 7 and Chapter 13, such as your employment status, how much you earn every month and which assets are exempt from the process. You may not qualify for both. If you do, though, this is one of the huge upsides to Chapter 13.
No matter which type of bankruptcy you decide to use, be sure you know all of the proper legal steps to take to ensure that the process goes smoothly.
Source: FindLaw, “Chapter 7 vs. Chapter 13 Bankruptcy,” accessed Sep. 20, 2017