Deciding to file bankruptcy is a big financial step that may help you get closer to the relief you are seeking.  It may seem confusing to understand which chapter to file even if you meet eligibility for more than one chapter. In some cases you may be able to choose your course of action, but reviewing your situation with a bankruptcy expert may also shed light on the best option.

Many consumers wonder if they are free to choose which chapter to file.  Others may feel bankruptcy is an option but are not sure how to determine which chapter to file.  For bankruptcy it often comes down to meeting income requirements set by the state.  These requirements are based on family size, monthly expenses and debt obligations within the household.

Chapter 7 bankruptcy and Chapter 13 bankruptcy are often the most common options reviewed by consumers.  While each chapter has regulations on how it affects debt obligations, your outcome may vary depending on debt involved.  If you are looking to discharge or eliminate debt, Chapter 7 bankruptcy may be an option to consider. This not only allows you to wipe out debt, it is also an option for those looking to use assets to satisfy creditors. This chapter is often filed by those with little or no assets.

The means test helps determine eligibility by comparing debt and income. If your income is under the median amount set by the state you may be able to file under Chapter 7.  Chapter 13 bankruptcy allows debtors to restructure debt through a repayment plan approved by the court.  The plan is based on how much income the debtor earns.  This chapter helps debtors catch up on payments related to their home or vehicle.