Once you have decided that bankruptcy is the right option for you, you must then decide which type of bankruptcy you would like to file. In some cases, the decision is based on your circumstances. In others, it is a matter of personal preference. Learn more about the types of bankruptcy available to individuals and small businesses, including how to determine which one may be most appropriate for you, with help from the following information.
The Basics: Chapter 7 versus Chapter 13
At first glance, all forms of bankruptcy might appear the same. However, there are some distinct differences between Chapter 7 and Chapter 13. For example, Chapter 7 bankruptcy discharges most forms of secured debt, meaning the debtor is no longer responsible for them. Another major difference is how assets are retained during each bankruptcy process. For example, if a borrower is making payments on a vehicle, the creditor may still repossess the car if a Chapter 7 bankruptcy is filed. In Chapter 13, the debtor may be permitted to keep the vehicle if they continue to make the agreed upon payments.
A Situational Overview: Which Chapter is Right for You?
Before deciding which bankruptcy chapter to file, debtors should speak with an experienced attorney about their situation. Some may find their circumstances will only permit one type. However, others may have the power to make a decision that suits their needs. To place some scenarios on these generalizations, consider the following:
- An unemployed debtor with few assets may find that Chapter 7 is most appropriate for their situation. They have little to lose in filing, and only a clean slate to gain;
- An unemployed homeowner that is upside down in their mortgage may find that Chapter 7 is more appropriate. Retaining the home is not a priority, and Chapter 7 can clear their debts;
- Unemployed homeowners that have significant equity in their homes may prefer Chapter 13 since it permits them to make payments and keep the home. However, if lack of employment is likely to be long-term, Chapter 7 may still be more appropriate; and
- An employed homeowner with equity in their home may find that Chapter 13 is most suitable, especially if they are only a little behind on their payments.
Contact Our Frisco, Texas Bankruptcy Lawyer
Because there are so many factors to consider, and numerous rules and regulations that govern the bankruptcy process, it is highly advised that debtors seek experienced legal assistance with the process. Dedicated to your best interests, The Page Law Firm can help you navigate through your bankruptcy filing with confidence. We can also help you prepare for a better future. Learn more by scheduling a personalized consultation with our Frisco, Texas bankruptcy lawyer. Call 214-618-2101 today.