No two financial situations are ever exactly alike, especially when you’re struggling with unmanageable debts. You may be burdened with high-interest credit card debt, or you’ve fallen behind on your mortgage. Fortunately, the bankruptcy code offers two different programs, chapter 7 and chapter 13, each of which is ideal for borrowers in different circumstances. Choosing the chapter best suited to your type of debt, amount of assets, and long-term goals is essential for getting your finances back on track.

Is a Chapter 13 or Chapter 7 Bankruptcy Better for You?

Chapter 7 Bankruptcy

For borrowers dealing with unsecured debts and limited means, a chapter 7 bankruptcy may be the best choice. Under chapter 7, also known as a “liquidation,” you can eliminate most types of unsecured debt, including credit cards, store charge accounts, back taxes, and lawsuit judgments. In exchange, the trustee may seize some of your assets to pay back creditors, but the law also allows you to exempt much of your personal property, so many borrowers can receive debt relief without surrendering anything at all.

Chapter 13 Bankruptcy

Chapter 13 bankruptcies, on the other hand, are designed to help struggling borrowers with financial resources catch up on secured debt payments. Through a court-managed repayment plan, you can make up arrears on your mortgage payments and avoid vehicle repossession, all while eliminating most of your unsecured debts. However, you will be expected to devote all disposable income to your bankruptcy payments for the next three to five years, potentially making you more vulnerable to financial emergencies.

With nearly 30 years of experience and multiple locations throughout North Carolina, The Law Office of J. Baron Groshon has helped borrowers throughout Charlotte, Concord, Gastonia, and Lake Norman reclaim their lives from debt. If you’re behind on your mortgage or can’t afford the minimum payments on your financial obligations, their debt relief professionals are there for you. They’ll help you determine whether chapter 7 or chapter 13 is best, prepare your paperwork, and guide you through every step of the complex process. Visit their website for more on their bankruptcy services, follow their Facebook for more legal tips, or call (704) 342-2876 to explore your debt relief options.