Bankruptcy: Chapter 7 vs Chapter 13

Considering Bankruptcy?  Confused About Your Options?

When financial troubles become overwhelming and bankruptcy might be unavoidable, there are different options to consider.  You’ve probably heard about Chapter 7 and Chapter 13 (Chapter 11 is a third type of bankruptcy which is usually used by corporations and business organizations).  Which one makes sense for you?

Chapter 7:  Liquidation and Start Fresh

If you have a high level of debt, large medical bills and other types of unsecured debt and you are having trouble meeting the payments, then a New Mexico chapter 7 bankruptcy may be a good option for you.  A Chapter 7 proceeding is commonly referred to as a “straight bankruptcy” or a “liquidation”.  Chapter 7 allows you to settle your debt by selling your non-exempt assets and using that money to repay your creditors.  Chapter 7 is the most common type of bankruptcy and allows for discharge of unsecured debt such as credit cards and department store charge accounts.  If you are an individual with insurmountable debt in Atlanta, Chapter 7 bankruptcy may help you get back on your feet.  Note that not all debts can be discharged through a Chapter 7 bankruptcy (student loans and property taxes, for example, must still be paid).  In a Chapter 7, all debtors are required to meet a means test to qualify.

Chapter 13: Reorganization with Better Terms

Chapter 13 is a good debt relief option if you have a steady income, but you just can’t keep up with your monthly bills.  Also referred to as a “wage earner plan”, Chapter 13 allows you to pay your debt over a 3- to 5-year period according to a Court-approved plan, often with more favorable rates and a lower principal designed to fit into your budget.  The benefit to an Atlanta Chapter 13 bankruptcy is that the Court works to negotiate between you and your creditors to create a realistic repayment plan based on your income.

Which Is Best?

The main advantage to filing for a Chapter 7 is that is a fairly quick and straight-forward process.  After filing, a discharge can be obtained in less than 6 months.  In a Chapter 13, payments have to be made into the Court, and the case will last over a 3 to 5 year period.  It all depends on which type of bankruptcy is best for you.  That is why I am here- to help you determine the best option.  In either case, when I file for your New Mexico Chapter 7 or Chapter 13 bankruptcy, all further collection is halted because the Court will issue an automatic stay against your creditors.  This means you won’t receive any more harassing phone calls or threatening letters.  A Chapter 13 will help you save a car from repossession or a house from foreclosure.

This is meant as just a brief introduction to these very complex laws.  I encourage you to contact me at my office as soon as possible if you are facing severe financial problems, so that we may guide you towards the best course of action for your specific circumstances.  Call or begin by filling out our Bankruptcy Form today.