You’ve tried everything, but you can’t shake the mounds of debt that are dragging down your credit score. Creditors are calling and texting you, and you’re having trouble applying for a mortgage or a car loan. It’s starting to look like filing for bankruptcy is your best option. How do you know which type of bankruptcy you qualify for?
What are the differences between Chapter 7 and Chapter 13 bankruptcy?
The majority of bankruptcies filed in the United States are Chapter 7 bankruptcies. Chapter 7 bankruptcies are for people under a certain income level. If you qualify for this type of bankruptcy, you’ll be able to get your debts discharged more quickly. However, Chapter 13 bankruptcy does have certain advantages that you won’t get with Chapter 7.
One of the biggest differences between Chapter 13 and Chapter 7 is that Chapter 13 allows you to keep assets. If you can stick to a payment plan, you’ll typically be allowed to keep your car, house or another asset that you’re trying to pay off. However, Chapter 7 bankruptcy typically requires you to return or sell assets to pay off your debts.
Another difference between the types of bankruptcies is the waiting period. According to bankruptcy law, if you file for Chapter 7 bankruptcy, you won’t be able to apply for bankruptcy again until seven years have passed. However, you can file for Chapter 13 bankruptcy only two years after your first filing.
Additionally, if you have a co-debtor on any of your debts, creditors can continue to contact them during a Chapter 7 bankruptcy. They cannot do this during a Chapter 13 bankruptcy.
Where can you go for help during a bankruptcy?
If you’re thinking about filing for bankruptcy, you probably have a lot of questions. Many people wonder if they’ll have to give up their house or vehicle. Others wonder if they’ll qualify for Chapter 13 bankruptcy. An attorney may be able to answer your questions and help you choose the path that allows you to pay off your debts while still keeping your assets.
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