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When debts become overwhelming, filing for bankruptcy under Chapter 7 or Chapter 13 can provide long-term financial relief. How do you know which one to choose? To help you make wise decisions, experienced bankruptcy lawyer Nancy V. Jacob is here to explain the differences below.

How Chapter 7 Bankruptcy Differs From Chapter 13

Filing for Bankruptcy Under Chapter 7

Often called liquidation or straight bankruptcy, Chapter 7 of the federal Bankruptcy Code allows individual and business debtors to discharge their debts without making payments to creditors. Most debtors complete the process and receive a discharge within six months of filing their petitions.

bankruptcyIndividuals must take and pass a means test that determines whether their income is low enough to qualify for Chapter 7. If it is not, Chapter 13 is an alternative. A Chapter 7 bankruptcy works well for debtors with high unsecured debt, such as credit cards and medical bills, and low or no income or assets. Chapter 7 bankruptcies remain on credit reports for 10 years from the filing date.

Filing for Bankruptcy Under Chapter 13

Often called a wage earner plan, Chapter 13 bankruptcies require that debtors have a reliable source of income, such as employment, disability, or pension payments. Debtors work with their bankruptcy lawyers to develop payment plans for court approval. Plans must run for three to five years, and at the end, the court discharges any remaining debt.

Chapter 13 works well for people with valuable assets they want to keep or secured debts, such as real estate and vehicles. This plan helps debtors pay off non-dischargeable debt, including delinquent child support payments, taxes, and student loans. Chapter 13 bankruptcies remain on credit reports for seven years from the date filed.

Based in Cincinnati, OH, bankruptcy lawyer Nancy V. Jacob draws on more than 29 years of experience to advise clients on making important financial decisions. If you are considering a Chapter 7 or Chapter 13 bankruptcy, get the wise counsel you need. To contact this dedicated lawyer and schedule an appointment, visit her website or call (513) 921-1400 today. 

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