Bankruptcy laws are in place to help consumers find debt relief and achieve a fresh financial start. For most individual filers, there are two bankruptcy options that are most effective: Chapter 7 and Chapter 13. Below, Ozark, Alabama, lawyer Ray T. Kennington, Attorney at Law, discusses some of the key differences between these two types of bankruptcy.

Who Benefits Most?

Chapter 7 is an elimination of most kinds of unsecured debt, while Chapter 13 is more of a debt consolidation program in which a filer repays what they owe via a long-term payment plan. Chapter 7 is better suited to individuals who have little or no income and, therefore, no way to realistically repay all they owe. Chapter 13 is best for those who have at least some disposable income each month to put toward their payment plan.

Assets

With Chapter 7, you risk losing certain nonexempt assets. In Alabama, a specific amount of assets is exempt from bankruptcy and, therefore, protected from being sold off to repay outstanding debts; this includes a home up to $5,000 in value, 75% of earned but unpaid wages, and $3,000 of personal property. Anything over this value is subject to liquidation. Under Chapter 13 bankruptcy laws, you can keep both exempt and nonexempt assets so long as you can stay up-to-date on both the repayment plan and what is currently owed on the asset.

Time Frame

Some people want to get out of debt as quickly and painlessly as possible to start over. Chapter 7 takes, on average, three to six months from the initial filing to the final discharge, making it a smarter choice for those looking for a faster option. Chapter 11 is more of an investment of both time and money, taking anywhere from three to five years to fully repay.

Ray T. Kennington, Attorney at Law, is here to help you determine which option is right for you. Since 1982, he has been representing area clients in bankruptcy, personal injury, disability, and family law matters. Call (334) 445-1200 or visit him online to schedule a consultation with a bankruptcy law attorney today.