If you reach the point where you feel you need to file bankruptcy in Virginia, you will have to make one final decision about which type to file. While there are many different bankruptcy options, the main two for individuals are Chapter 7 and Chapter 13. They are two very distinct options with many specific differences. You should understand how both work to know which one to choose.

Experian explains that bankruptcy laws will often make the choice between Chapter 7 and 13 for you because of the means test. This is a test of your income. If you make over a certain amount, you will have to file Chapter 13 and Chapter 7 will not be an option. So, before you really start to think about which you want to choose, make sure that you have a choice by doing the means test.

If you can choose between them, then the main thing you need to know is that Chapter 13 is a repayment plan while Chapter 7 is more of a liquidation. What this means is that if you file Chapter 13, the court creates a repayment plan where you will pay your creditors back some or all of the money you owe them over a set time. With Chapter 7, the court will take all of your unexempt assets and turn them into cash which it then uses to pay back your creditors. After this, any remaining debt is wiped out and you have a clear slate. This information is for education and is not legal advice.