Both Chapter 7 and Chapter 13 bankruptcy programs provide valuable lifelines for borrowers struggling with unmanageable debt, but each is designed for different financial situations. Depending on the type of debt you carry and your own long-term goals, either program may be the right choice. Before filing a petition, it’s important to understand the benefits of each type of bankruptcy and how they can help you recover from debt.

What is Chapter 7 Bankruptcy?

Chapter 7 bankruptcy allows you to completely discharge most types of unsecured debts, including credit cards, medical bills, lines of credit, and even unpaid income taxes. In exchange, the trustee of the court may be able to seize some of your assets to pay back your creditors. However, a good bankruptcy attorney can help you claim every exemption you qualify for, allowing you to keep as much of your property as possible. While a Chapter 7 may not prevent foreclosure or help with mortgage payments, it may create room in your monthly budget, giving you the resources to catch up on these debts.

What is a Chapter 13?

Unlike Chapter 7, Chapter 13 bankruptcy is intended to help those dealing with temporary financial hardship pay back a portion of mortgages and other secured debts through a repayment plan. These court-managed repayment plans allow you to prevent foreclosure and repossession, while most secured debts can be eliminated. However, your creditors must receive an amount that is equal to the value of your nonexempt property. Once your bankruptcy is discharged, you’ll be current on all your accounts and can begin rebuilding your credit. Because you’ll have to continue meeting your current financial obligations while making your bankruptcy payments, you should ensure you have the resources before filing your petition.

Filing for bankruptcy protection can be a confusing, difficult process, but the attorneys at Achille Law, P.C. in Jefferson County, PA are committed to helping you find the path to financial solvency. They understand how stressful living under the shadow of debt can be, and have the skill to help you find the best option for your situation. Visit their website to learn more about their legal services or call (814) 849-6701 to schedule a consultation.