A debtor has to decide whether to file for Chapter 7 or Chapter 13 bankruptcy. Base the decision on your type of debt and personal preferences. Filing for Chapter 7 is faster and gives you greater control over your property and assets. The Chapter 13 plan gives you more time to earn the money and make repayments. Understand the basics of bankruptcy plans before you file.
Chapter 7
The main difference between a Chap 7 & Chap 13 bankruptcy is the speed of the court’s decisions. Chapter 7 bankruptcy is the faster option that allows your debts to be discharged immediately. You receive immediate results in a few weeks or months. However, not everyone qualifies for this plan if you don’t meet the state’s minimum and maximum income requirements.
Chapter 13
A Chapter 13 bankruptcy application takes longer to process and has long-term repayment terms. You have flexible options to repay your debts over several months or several years. You can discharge certain debts, such as court fees. Chapter 13 also allows you to stop a home foreclosure, the repossession of a vehicle and the seizure of your assets.
Reviewing your financial options
The main differences between Chapter 7 and Chapter 13 bankruptcy plans will remain the same. Wiping out bad debts right away is the primary reason to choose the Chapter 7 plan. Taking full responsibility for your debts is the reason to choose Chapter 13; however, you must stick to making each payment on time. Your task is to compare the benefits and drawbacks and choose a plan based on your unique financial situation.