If you’ve been struggling with debt and financial distress for a while, you may be thinking about filing for bankruptcy. Making this choice has helped many people find relief and a fresh start. However, deciding to file for bankruptcy is only the first step of the process.
One of the next steps is figuring out which type of bankruptcy will benefit you the most. An experienced bankruptcy attorney can give you advice and help you make the best possible decision, but knowing the differences between the main two types of individual bankruptcy, Chapter 7 and Chapter 13 bankruptcy, is a good way to start.
Chapter 7 Vs. Chapter 13 Bankruptcy
The main difference between these two is income level required to file. Chapter 7 is generally reserved for individuals under a certain income level. Additionally, it is usually simpler and less time consuming. Most people end up filing Chapter 7 bankruptcy with only 29 percent of bankruptcy filings falling into Chapter 13.
However, there are certain other differences between these two types of bankruptcy. For example, in Chapter 13 bankruptcy you are usually allowed to keep your house and car, while in Chapter 7 you may have to return them to the creditor or pay for them wholesale.
Additionally, in Chapter 7 bankruptcy you have to surrender nonexempt property to the bankruptcy trustee, while Chapter 13 bankruptcy allows you to keep your nonexempt property. These are just a few examples of the differences between these two types of bankruptcy.
Evaluating your situation and deciding which option will work best for you is an important part of the process that cannot be overlooked. Consulting with a professional is a good way to ensure you are making the right decisions so you can start your path toward financial recovery.