When debt spirals out of control, and you’re unable to repay it, bankruptcy is a viable option. A bankruptcy lawyer will present you with the two types of filings available to consumers; Chapter 7 and Chapter 13. While they both offer a clear path out of unmanageable debt, they each achieve this goal in different ways. Here are some differences to help you determine which one is best for you.

Chapter 7

In Chapter 7 bankruptcy, the courts will eliminate most types of unsecured debts, such as credit card balances, medical bills, and past-due utility costs. Some unsecured debt can’t be discharged in bankruptcy, including student loans, late child support payments, and certain tax obligations. A bankruptcy lawyer will ensure you qualify for Chapter 7 by having you take and pass a means test, which weighs a filer's income-to-debt ratio. Chapter 7 is best suited to individuals with little or no income and few assets. Depending on the amount of debt and complexity of the filing, a Chapter 7 case is typically completed within three to six months.

Chapter 13

Chapter 13 bankruptcy doesn’t eliminate debt but restructures it. Instead of multiple balances to repay each month, Chapter 13 organizes all outstanding debts into a single monthly payment plan. In some cases, your bankruptcy lawyer may be able to renegotiate certain debts down to lower balances. To be eligible for Chapter 13, your debt must not exceed specific limits. The 2019 caps are $419,275 in unsecured debt and $1,257,850 in secured debt. Chapter 13 is ideal for those with a steady income who can make their monthly payments. A Chapter 13 filing is a long-term resolution, with the repayment plan taking anywhere from three to five years to complete.

To better determine which option is right for you, contact a bankruptcy lawyer. Donald K. Swartz of Swartz Law Office in Batavia, OH, serves clients throughout Clermont County. In addition to bankruptcies, he offers representation for wills, trusts, and estate planning, family law cases, and real estate transactions. Call (513) 732-0900 or visit his website to schedule a consultation.