For many debtors, Chapter 7 bankruptcy is a better option than Chapter 13 bankruptcy. ... For instance, Chapter 7 is quicker, many filers can keep all or most of their property, and filers don't pay creditors through a three- to five-year Chapter 13 repayment plan.
A Chapter 13 bankruptcy involves repaying some or all of your debt over a three- to- five-year period, while a Chapter 7 bankruptcy involves wiping out most of your debts without paying them back. ... In that way, a Chapter 13 may be better for your credit than a Chapter 7.
Chapter 7 bankruptcy, also known as a liquidation, is a legal option that can help you clear some or all of your debt. ... Chapter 13 bankruptcy is also a legal option that can help you get some debt discharged, but allows you to keep your property and repay your debt by completing a three- to five-year repayment plan.
Most people who file for bankruptcy choose to use Chapter 7 if they meet the eligibility requirements. Chapter 7 is a popular choice because, unlike Chapter 13, it doesn't require filers to pay back a portion of their debts. ... You can repay the missed payments over time using the Chapter 13 repayment plan.
Disadvantages of Filing for Chapter 13 Bankruptcy
Be aware that it can take up 5 five years for you to repay your debts under a Chapter 13 plan, and debts must be paid out of your disposable income. ... A Chapter 13 bankruptcy can remain on your credit report for up to 10 years, and you will lose all your credit cards.
There is no minimum amount of debt you must have in order to file for bankruptcy relief. While the amount of your debt is an important factor to consider, there are other more important factors to take into account in determining if a bankruptcy filing is in your best interest.
If your annual income, as calculated on line 12b, is less than $84,952, you may qualify to file Chapter 7 bankruptcy. If it's greater than $84,952, you'll have to continue to Form 122A-2, which we'll review in the next section. It should be noted that every state has different median income calculations.
Bankruptcy is a powerful tool for debtors, but some kinds of debts can't be wiped out in bankruptcy. ... It also eliminates many types of debt, including credit card balances, medical bills, personal loans, and more. But it doesn't stop all creditors, and it doesn't wipe out all obligations.
You don't lose property in Chapter 13—that is as long as you can afford to keep it. ... If you can't protect all of the equity with an exemption, you'll have to pay your creditors an amount equal to the value of any nonexempt property equity through your repayment plan (and possibly more).
If you file for Chapter 7 bankruptcy and local bankruptcy laws allow you to exempt all of the equity you have in your car, you can keep the vehicle—as long as you're current on your loan payments. ... If you have less equity than the exemption limit, the car is protected.
Chapter 11 can be done by almost any individual or business, with no specific debt-level limits and no required income. Chapter 13 is reserved for individuals with stable incomes, while also having specific debt limits.
Options If You Can't Afford a Chapter 7 Bankruptcy Lawyer
What Are the Types of Bankruptcies?
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