Coming to the decision to file a bankruptcy can be stressful even when necessary.
However, there are filing options available for people under differing circumstances. The most common are Chapter 7 and Chapter 13 bankruptcies and each has advantages.
Advantages of a Chapter 7 bankruptcy
A Chapter 7 bankruptcy allows you to eliminate certain debts without the need to pay them back. Some benefits include:
- The process is typically over within six months.
- You can start fresh with only the possibility of secured debts to pay.
- You do not have to meet a debt minimum to qualify.
- All income or assets you acquire, with the exception of inheritance, is untouchable to collectors.
If you have secured assets you need to keep that are not exempt, a Chapter 7 bankruptcy may not be the best option for you.
Advantages of a Chapter 13 bankruptcy
A Chapter 13 bankruptcy is typically preferable. It reduces the amount of debt and allows you to pay installments for a set period. Benefits include:
- There are no limitations to the number of times you can file.
- You have protection from home foreclosure.
- If you can afford the payment plan, you do not lose your property.
- You have more dischargeable debts.
- You have more time to pay debts, such as child support and taxes.
- A Chapter 13 can reduce debts you could not cancel in a Chapter 7.
Both bankruptcy types offer you immediate protection from collectors and garnishment of wages.
Determining which is best for you depends on your personal situation.