Whether you fall behind on your credit card payments or have a medical emergency that results in overwhelming bills, being unable to meet your financial obligations is stressful. Depending on your situation, filing for Chapter 7 or Chapter 13 bankruptcy may provide you with much-needed relief. Though these options share some similarities, there are many notable differences. How do you determine which chapter is right for you? The answer often lies in how much money you earn.
Chapter 7 Bankruptcy
If you don’t have disposable income or significant assets that can be liquidated for cash, Chapter 7 bankruptcy may be right for you. This chapter discharges debts like outstanding credit card balances, personal loans, and medical bills. However, Chapter 7 bankruptcy does not discharge financial obligations such as student loans, child or spousal support, or income taxes. If you file under this chapter, you will be allowed to keep assets like your vehicle and home as long as you are current on those payments.
Chapter 13 Bankruptcy
If you have disposable income or assets that can be sold, you will not be eligible to file for Chapter 7 bankruptcy. Instead, you must file for Chapter 13 bankruptcy and use that extra income to repay creditors over a 3 to 5 year period.
Under Chapter 13 bankruptcy, exempted property such as your home, vehicle, or retirement account, is not sold off. Rather, you agree to pay your creditors the equivalent value of your nonexempt property. The more you own, the higher this payment will be. After you have completed your repayment plan, any outstanding balances on nonpriority unsecured debts, such as personal loans, medical bills, and credit card balances, will be discharged.
If you are preparing to file for either Chapter 7 or Chapter 13 bankruptcy, the seasoned attorneys at Anderson Law Firm in High Point, NC, will guide you through the process. These bankruptcy law experts give clients the assistance and solutions they need to enjoy a fresh financial start. Visit their website for more information and call (336) 431-7336 to schedule your free initial consultation with a personal bankruptcy attorney.
The information contained in this site is for general guidance on matters of interest only. The application and impact of laws can vary widely based on the specific facts involved. We are a Debt Relief Agency. We help people file for Bankruptcy Relief under the Bankruptcy Code.