When people talk about bankruptcy, they sometimes makes it seem like there is only one kind that you can pursue. Interestingly enough, there are actually several forms of bankruptcy that may be able to help you. Two of the most commonly used are Chapter 7 and Chapter 13 bankruptcy.
Before you decide on one to use, you should know that they have significant differences. Chapter 7 bankruptcy, which is called a liquidation bankruptcy, may require you to give up some of your assets to pay back what you owe to creditors. On the other hand, Chapter 13 bankruptcy may help you keep your assets while giving you the chance to make payments to your creditors based on the schedule provided by the bankruptcy court.
What makes Chapter 7 bankruptcy right for someone?
Chapter 7 bankruptcy is good for those who earn less than the state median and who have little or no work presently. They may have a large amount of debt compared to their assets as well.
When is Chapter 13 a good idea?
Sometimes, it’s smart to choose a Chapter 13 bankruptcy if you earn too much to qualify for Chapter 7. If you want to keep all of your assets, Chapter 13 bankruptcy may give you a better opportunity to do so, though some people are able to use exemptions to keep their assets in a Chapter 7 bankruptcy, too.
There are many other benefits and downsides to Chapter 7 or Chapter 13 bankruptcy that you may want to discuss with your attorney as you decide on which you want to apply for. Our website has more that you can read about both of these options.