In many cases, a Chapter 7 bankruptcy might be more beneficial for you than a Chapter 13 bankruptcy. Chapter 7 is generally faster than Chapter 13 and most debtors can keep all or most of their property. Also, Chapter 7 filers usually do not have to pay back unsecured debts. However, not all debtors qualify for Chapter 7 bankruptcy. Learn more about when Chapter 7 might possibly be better for you than alternative forms of bankruptcy.
Advantages of Chapter 7 Bankruptcy
The average Chapter 7 bankruptcy case is opened and closed in three to six months. At this time, the individual filing appears debt-free except for a mortgage, car payments, and certain other kinds of debts, including recent taxes, student loans, and outstanding child support.
Although it is possible to lose property in Chapter 7 bankruptcy, most filers do not. This is because those who qualify for the income limitations of a Chapter 7 bankruptcy typically do not have a lot of non-exempt assets to liquidate. Assets needed for day-to-day living are exempt. They are not liquidated to pay back debt. This means more of your debt is discharged under a Chapter 7 bankruptcy.
Not everybody is qualified to use Chapter 7 bankruptcy. If your income is adequate to fund a Chapter 13 repayment plan, after subtracting allowed expenses and payments, you cannot file for Chapter 7 bankruptcy.
Drawbacks of Chapter 13 Bankruptcy
If you qualify for a Chapter 7 bankruptcy and a Chapter 13 bankruptcy, look at which is the best avenue to take. The primary reason to choose Chapter 7 is because it does not require you to pay back your unsecured debts. If you use Chapter 13 bankruptcy, you must finish the three to five year repayment plan. Once complete, unsecured debts are discharged.
Despite this drawback, there are good reasons why individuals who qualify for both decide to use Chapter 13. For example, a debtor with secured debt won’t benefit much from a Chapter 7. This is because that debt cannot be erased. However, most people with unsecured debt file a Chapter 7 bankruptcy to gain the financial footing they need.
For help filing a Chapter 7 bankruptcy, contact Beecher & Conniff today for more information by calling 253-627-0132.