Chapter 7 & 13 – Which is Best?

Chapter 7 & 13

When it comes to deciding what type of bankruptcy to file, there are many considerations. Each type of bankruptcy, chapter 7 & 13, comes with a list of pros and cons that have to be considered. In the content below, we dive into some of the considerations when deciding what is best for you. This is nowhere near an exhaustive list, but general information for the curious. Give us a call to get further information and see what approach is right for you.

Chapter 7

Break from your financial chains with help from our experienced team. The most often used bankruptcy remedy is also the one that moves the fastest and is the least expensive to file. After the petition and schedules are filed with the court, we accompany you to your hearing, which is called “the meeting of creditors.”

What Debt is Erased?

It’s a common misconception that filing bankruptcy erases ALL debt. While it does provide relief from many of the bills that come in, it’s important to know that there are special kinds of debt that can’t be relieved. These include:

  • Child support
  • Income taxes less than 3 years old
  • Property taxes
  • Student Loans
  • Fines and restitution imposed by courts for crimes by the debtor
  • Spousal support may not be forgiven as well
Chapter 7 & 13 - The road ahead
Chapter 7 & 13 – The road ahead

There should be no surprises at the hearing. John A. McLaughlin, Jr., P.C., makes sure that you are prepared for the hearing by advising you on what to expect and how to testify with confidence and truthfulness. After objections are resolved, your debt is discharged by a federal court. Your credit balances are no longer collectable forever. In addition, garnishments, lawsuits, and creditor harassment will end.

Chapter 13

This type of bankruptcy allows for debt reorganization and provides specialized relief you cannot obtain anywhere else in the law. For instance, you can stop foreclosure of your home and force the lender to accept payments to cure the default. The lender must cooperate.

In addition to stopping foreclosure, many times you can lower a car payment and, as unbelievable as it sounds, can sometimes eliminate completely a second mortgage on your residential home. Chapter 13 plans range between three to five years in duration, after which most, if not all, of your unpaid balances will be discharged. You will make your payments directly to the trustee instead of your creditors.

Putting It All Together

So what does it all mean? Creditworthiness and the likelihood of receiving a Chapter 7 or 13 discharge are some of the considerations in determining whether to file bankruptcy. The importance of the effects of bankruptcy on creditworthiness is sometimes overemphasized, because by the time most people are ready to file for bankruptcy, their credit score is already ruined.