What’s The Difference Between Chapter 7 And Chapter 13 Bankruptcy
When it comes to debt relief, filing for bankruptcy is one of the most suitable and effective options available. Depending on their circumstances, many of those who go this path file for Chapter 7 or Chapter 13 bankruptcy. The most advantageous option is determined by the individual’s assets and financial aspirations.
To assist you in deciding which bankruptcy option is best for you, we’ve put together a list of the advantages and disadvantages of Chapter 7 and Chapter 13 bankruptcy.
What distinguishes them?
While you may maintain your property and make payments toward your debts over three to five years, filing for Chapter 13 bankruptcy enables you to have some of your debts dismissed while keeping some of your assets. Are you thinking about filing for Chapter 7 or Chapter 13 Nevada bankruptcy? The following are a few things to bear in mind:
Chapter 7 bankruptcy
Consider Chapter 7 if you have a tight budget or no discretionary money at all. To file, you must establish that you cannot afford to pay your debts. Consider these factors while evaluating if Chapter 7 bankruptcy is best for you.
It may help you pay off debt faster.
A debt discharged in Chapter 7 bankruptcy is no longer legally owed. Your loan or credit card payments may now be spent on other things, such as home essentials. A bankruptcy attorney might explain exemptions to Chapter 7 dischargeable debts.
Chapter 7 may be speedier than Chapter 13 in paying off debts.
Instead of three to five years for Chapter 13 bankruptcy, Chapter 7 bankruptcy takes around 90 to 100 days, plus the time it takes to complete a credit counseling course before filing.
You may lose assets.
Loss of assets is one of the primary implications of filing Chapter 7. Cash or property may be at risk depending on state regulations and equity in particular assets.
If you hold property and wish to maintain it, see Chapter 13. Consider these points.
If you make enough money, you may have to file Chapter 13.
It would help if you could not repay your debts to qualify for Chapter 7 bankruptcy. If your current monthly income exceeds the normal income for a family of your size in your state, you can’t apply for Chapter 7 bankruptcy protection. If this is the scenario, Chapter 13 may be the most appropriate option for you.
It may halt debt collection and foreclosure.
If you’re a struggling homeowner, Chapter 13 may be able to assist. Filing Chapter 13 might halt foreclosure and allow you to make up on missed mortgage payments. If you have collection debts, any dismissed through Chapter 13 means your creditors can no longer pursue you for the money.
It can help you repay your debt.
As well as being more convenient and cost-effective than Chapter 7. You may use Chapter 13 to repay all or part of your debts. You may combine your monthly payments depending on your repayment plan. Your creditors will get a lump sum payment. Certain loans may also have lower monthly payments, allowing you to repay them over a three- to five-year period.
Bankruptcy is a tough legal decision. Examine all your choices before declaring bankruptcy. Once you’ve weighed all your alternatives and decided it’s the best decision for you, investigate Chapter 7 and Chapter 13. If you can’t afford to repay your obligations after evaluating your position and choices, you should see an attorney determine which kind of bankruptcy is appropriate for you.