Chapter 7 v Chapter 13
by
Stuart Nachbar on Aug. 12, 2015
Bankruptcy & Debt Bankruptcy Bankruptcy & Debt Reorganization Bankruptcy & Debt Credit & Debt
Summary: Compare Chapter 7 to Chapter 13, which is right for you
Anything leading you to going through bankruptcy is not usually a happy tale, but that does not mean that your life after bankruptcy cannot be better. The purpose of bankruptcy is that you get to have a second chance at building your credit, meeting all your financial responsibilities, and getting the proverbial "fresh start".
Before going into a meeting with a Bankruptcy Professional, you should learn about personal bankruptcy yourself. You can began by searching for websites which offer information about it. This Firm has put out several blogs on Bankruptcy.
Don't avoid telling your attorney about any specifics of your case. TELL THE ATTORNEY THE TRUTH. Don't assume they already know and that they'll remember something important details committed to memory or written down. This is your bankruptcy case, so don't be scared to mention it.
Don't pay for the consultation and ask a lot of questions. Most lawyers provide a consultation for free, but please understand that the professionals time is valuable also, and he/she may only offer thirty (30) minutes. You can always ask if you can send them information about your case via email ahead of time, so that they have a general understanding of your situation. Only make a decision after you feel like your concerns and questions have been addressed. You do not have to give them your decision right after this consultation, although we appreciate it if you do. You can take as much time for consulting with different lawyers.
Be sure to hire an attorney before you embark upon filing for bankruptcy. You might not know everything you need to know in order to have a successful outcome of your case. A lawyer that specializes in bankruptcy can make sure you are following the proper bankruptcy process.
Chapter 7 vs. Chapter 13 Bankruptcy
Be sure you can differentiate between Chapter 7 and Chapter 13 bankruptcy. Chapter 7 is usually the best option to erase your debt. This type of bankruptcy ends any relationship with your debt, exclusive of taxes or Domestic Support Obligations. In a Chapter 13 bankruptcy you will be required to work out a payment plan to eliminate all your debts according to a specified formula that a bankruptcy professional can explain to you. Although if you have a Second or Third Mortgage on the Property, only in a Chapter 13 (at this time) can you possibly strip the Second or Third lien off your property.
Filing bankruptcy does not mean that you have to lose your house. Depending on whether the value of your home has decreased or if you have a second mortgage on the home, you might be able to keep it. You are still going to want to check out the homestead exemption or the federal exemption (depending on your jurisdiction) because it may allow you to keep your home. Also, if you file a Chapter 13, you may be able to qualify for a Loan Modification or pay the arrears through your Chapter 13 Plan.
Don*t wait till it's too late to file bankruptcy. Do NOT take money from your 401K or IRA to pay off the debt because you think that you will lose your retirement account if you file (you won't in many jurisdictions). Most importantly, do not take Equity Lines of Credit becuase all you are doing is turning Unsecured Debt (Credit Card Debt) into Secured Debt. It is quite common for people to linger, hoping that their financial difficulties will somehow resolve; however, thinking they may go away on their own is not realistic. It is too easy for debt to mount up and become uncontrollable, and avoiding the problem will make things worse. Do not bury your head in the sand. As soon as you discover your debt is getting too big, call a bankruptcy lawyer to talk about