Many people are struggling to overcome substantial debt. When they finally decide that bankruptcy is their best solution, they often need guidance in choosing between a Chapter 7 and a Chapter 13 bankruptcy.
Unless you have already gone through bankruptcy, you may have little understanding of which type will best meet your needs. Learning more about the benefits of each type of bankruptcy can help you make the right choice.
When should you choose Chapter 7?
If you need a fresh start by eliminating as much of your debt as possible, a Chapter 7 bankruptcy can help. When successful, you can eliminate much of your credit card and medical debt. Chapter 7 may also be wise if:
- Your situation requires a fast solution (because it can take as few as three months).
- You cannot afford a repayment plan.
- You want to eliminate more debt than is possible through Chapter 13.
Once this type of bankruptcy concludes, you will feel like you have an opportunity to make better financial choices.
When should you choose Chapter 13?
A Chapter 13 bankruptcy allows you to pay off some of your debt by creating a reorganization and repayment plan. In many cases, this type of bankruptcy makes many people feel financially responsible. Another reason people choose Chapter 13 is to save their homes from foreclosure. Other reasons to consider Chapter 13 bankruptcy include the following:
- You do not qualify for Chapter 7.
- You want to stop the repossession of your car.
- You want to reorganize and pay your student loans, which you cannot otherwise address through bankruptcy.
- You want to protect others from liability in joint debts.
Another way to determine which form of bankruptcy is best for your circumstances is to discuss your options with an experienced bankruptcy attorney. This will give you a better chance of choosing the right debt solution for your family.