How do I decide Whether Chapter 7 or Chapter 13 Bankruptcy is best for me?

In a Chapter 7 Bankruptcy, you pay creditors out of non-exempt property owned at the time of filing.

In a Chapter 13 Bankruptcy, you keep all assets owned (even those that are not exempt under Chapter 7) at the time of filing and pay creditors out of future income over 3 to 5 years.

If you are like most people, all or most of your property will be exempt from creditors. If so, Chapter 7 Bankruptcy is generally a simpler, less expensive, and quicker way to obtain bankruptcy relief.

However, Chapter 13 Bankruptcy may be your best option if , one or more of the following apply:

  1. You dont qualify for Ch. 7 Bankruptcy because you obtained Ch. 7 relief less than 8 years ago
  2. You dont have the up-front money to pay for a Ch. 7 Bankruptcy (attorneys fees for Ch. 13 can be repaid within the Ch. 13 plan)
  3. You need to get rid of certain debts you cant get rid of in Ch. 7 such as certain taxes, the amount claimed as damages for the willful destruction of anothers property, debts which were not discharged or were waived in a prior bankruptcy, and marital property settlements as a result of divorce (does not include ongoing child support requirements)
  4. You need to catch up on missed payments on property you would like to keep under a payment plan and avoid foreclosure or repossession
  5. You want to keep property you own even though it wouldnt be covered by an exemption under Ch. 7
  6. You have too much income after subtracting reasonable and necessary living expenses for your area and certain debt repayment.
  7. You want to reduce your debt on certain secured loans to the value of the collateral. However, this is not available for home loans or vehicles purchased less than 2.5 years prior to bankruptcy filing.
  8. You want the Court to reduce your interest rate on your secured debt obligations to a manageable amount