How to Determine the Right Bankruptcy Chapter to File

Determining the Right Bankruptcy Chapter to File

If you are thinking about filing bankruptcy you may wonder which chapter is best for your financial situation. While you can get a better idea by discussing your circumstances with an experienced bankruptcy attorney, you may be able to gain an idea based how each chapter is meant to help the consumer.

When bankruptcy is considered by an individual or a small business owner, Chapter 7 or Chapter 13 is likely to be reviewed.  Chapter 7 bankruptcy may be an option for those looking to discharge or eliminate unsecured debt.  This chapter also allows you to liquidate qualifying assets toward repaying creditors.  If you’re experiencing a job loss, lack of stable income, being sued for unsecured debt or seeking a way to stop your wages from being garnished, Chapter 7 could be the best option for you.

If you can afford to pay your creditors while seeking debt relief, Chapter 13 bankruptcy can help by creating a repayment plan that reorganizes your debt.  This filing allows consumers to receive a fixed payment amount that would be paid over a 3 to 5 year period.  This chapter may be an option if you are facing foreclosure , fallen behind on mortgage payments while wanting to keep your home or dealing with tax debt that is not dischargeable in Chapter 7.  Since your monthly payment will be a fixed amount, you won’t have to worry about paying interest or negotiating with creditors.

Deciding to file bankruptcy is an important financial step that helps you regain control of your financial priorities.  Because each person’s situation is unique, review bankruptcy options with an experienced legal expert.