Understanding differences between bankruptcy chapters can make a big difference
in helping you obtain a favorable outcome for your situation. Most bankruptcies
filed by individuals and small businesses include
Chapter 7 and
Chapter 13. When it comes to understanding which chapter you should file, your debt,
income, assets, and financial goals will have a significant influence
on which option is the best solution.
Chapter 7 bankruptcy is designed to eliminate or wipe out debt obligations
for a fresh start. Unsecured debts such as
medical bills, personal loans, and credit card bills may qualify for discharge by the
court. Usually, debtors have little or no assets while meeting income
requirements. This option can also be used to sell nonexempt property
to satisfy creditors.
Chapter 13 bankruptcy is a repayment schedule approved by the court. You
make monthly payments to your appointed trustee who then distributes payment
to your creditors. This is a common option for debtors who are in default
with their mortgage or vehicle loan payments. You can get caught up on
missed mortgage payments or qualify for a reduced principal balance on
your vehicle. The repayment schedule may last from 3 to 5 years with qualifying
debt being discharged at the end of plan.
There are benefits of filing with either plan, but discussing your options
with a bankruptcy expert in Dallas-Fort Worth will help you determine
if they fit your situation. Both chapters offer property protection from
creditors to give you more time in developing the right solution for a
favorable outcome.