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Which type of bankruptcy works best for you?

There are often two roads that lead to same place. If a Colorado resident has a goal in mind, the important thing may be reaching that goal, regardless of which way a person takes to get there.

When it comes to the goal of debt relief, there may be different ways for individuals to accomplish their goal. Even when a person decides to file for bankruptcy, for example, there are different ways of filing for bankruptcy that, while procedurally different, result in the same end goal of debt relief.

Typically, when a person thinks of bankruptcy, they may think of Chapter 7 bankruptcy. This form of bankruptcy liquidates a person's assets to pay off creditors.

Chapter 7 is not the only way of filing for bankruptcy, however. Through Chapter 13 bankruptcy, a person can achieve debt relief through setting up a repayment plan. The repayment plan, which typically lasts for five years, allows a person to make manageable payments each month toward paying off his or her debt.

Because liquidation does not occur in Chapter 13 as it does in Chapter 7, a person may be able to keep more of his or her property through the process while the payments are being made. There is still a difference made between secured debt and unsecured debt, as the person is required to pay only a percentage of unsecured debt.

Ultimately, both Chapter 7 and Chapter 13 allow the person to become debt free. The decision of which method works best depends upon a person's individual circumstances.

Source:, "Chapter 7 vs. Chapter 13," Dave Ramsey, July 29, 2014

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