Filing for Chapter 7 bankruptcy can provide you with debt relief. But Chapter 13 bankruptcy can achieve the same goal – and neither approach is right for everyone.
For some people, deciding whether to file for Chapter 7 versus 13 is a matter of eligibility. For others, personal circumstances dictate which type of filing is the most appropriate choice. A Utah bankruptcy attorney can help explains what you need to know and help you determine which type of claim is right for you.
In a Chapter 7 bankruptcy, a trustee sells any nonexempt assets and distributes the proceeds to the creditors. Once the funds are exhausted, the court discharges any remaining eligible debts.
With a Chapter 13 bankruptcy, no property is sold. Instead, the debtor – often with the help of an attorney – reorganizes their debts and submits a repayment plan to the court for approval.
The greatest benefit to Chapter 7 bankruptcy is the potential for immediate debt relief. Certain obligations – including child support, alimony, student loans and tax debts – remain after the case is complete. However, as the court discharges most other debts, filing for Chapter 7 can be a great way to get a fresh financial start.
A second advantage to Chapter 7 bankruptcy is the time the process takes. Most cases are complete in about four to six months. In contrast, the average timeline for a Chapter 13 bankruptcy is three to five years.
With a Chapter 13 bankruptcy, the biggest benefit is the ability to avoid foreclosure and car repossession. By restructuring debts and creating a repayment plan, filers can keep their property and have a better chance of paying off their loans and creditors in full.
In addition, Chapter 13 can be a smart option for anyone with debts that are not dischargeable in Chapter 7 bankruptcy. These financial obligations can be much easier to meet with an affordable repayment schedule.
To be eligible for Chapter 7 bankruptcy, you need to pass the means test. If your household income is higher than the state median and you have enough disposable income to afford repayment of your debts, you may not be eligible. However, exceptions exist to every rule, and an experienced bankruptcy attorney may be able to help you find a way to qualify for this option.
If not, you can still file for Chapter 13. And if you want to keep your home or car, have a significant amount of non-dischargeable debt or own property that a trustee could seize and sell, this type of filing might be a preferable option.
Which type of bankruptcy claim is right for you? The highly-skilled legal team at the Law Office of Davis & Jones, P.C., serving Salt Lake City and the greater northern Utah area, can provide you with expert advice based upon your personal financial situation.
For answers to all of your questions about Chapters 7 and 13 bankruptcy filings and help with every step of your case, contact the Law Office of Davis & Jones today to schedule a no-cost, no-obligation consultation.