Personal Bankruptcy Filing: The Differences Between Chapter 13 & Chapter 7
You may be in the unfortunate position of falling deeper and deeper into debt. Your credit cards are maxed out, bills keep piling up, and you are falling further behind each month. You want to explore bankruptcy as an option, so it’s important that you understand they types of bankruptcy that exist for you and what they mean.
There are two types of personal bankruptcy filings, Chapter 7 and Chapter 13. In a Chapter 7 filing, you will sell your property, that isn’t exempt, in order to pay the back the people and companies you owe money to. With Chapter 13, you will be restructuring your debt and work out a payment plan to pay back your debt.
Chapter 7 bankruptcy is a relatively short process. It can be handled in 6 months or less from the date of the filing in most cases. It provides an opportunity for a new start and is the most common type of personal bankruptcy filed.
If you are in a situation where you can sell some of your property, that which is nonexempt, and pay off your creditors, than Chapter 7 could be an option. You will want to be sure that after you sell your property, you still have enough to start anew. You should consult with an attorney to see if this is the best option for you.
If you have an income coming in or if you make to much to qualify for Chapter 7 bankruptcy, than Chapter 13 may be a fit for you. A Chapter 13 filing will enable you to work with your creditors to repay them. Typically you will restructure the debt you owe and repay it within 3-5 years.
If you are currently making money, but are not in a position to pay of your debt immediately, you should consider Chapter 13. Speaking with a bankruptcy lawyer will ensure you take the right path with your bankruptcy filing.
I hope that you have a better idea of what Chapter 13 and Chapter 7 bankruptcy is. Continue your research and connect with a MA bankruptcy lawyer to make sure you make the right decision for your future.
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