Bankruptcy is many people’s last resort for managing their debts. When filing for bankruptcy, people have several options. The majority of people choose either a Chapter 7 or Chapter 13 bankruptcy.
If you don’t know what a Chapter 7 or Chapter 13 bankruptcy is, you aren’t alone. These two legal processes have many differences. Here’s what you should know:
Chapter 7 bankruptcy
Also known as liquidation bankruptcy, Chapter 7 bankruptcy helps people pay off some or all of their debt by liquidating assets. This may sound like you’ll lose all of your assets by filing for Chapter 7 bankruptcy, but the truth is that many assets are exempt. The vast majority of people who qualify for Chapter 7 don’t have any non-exempt assets, like vacation homes, to lose.
Chapter 13 bankruptcy
Alternatively, you may wish to keep all of your assets and file for Chapter 13 bankruptcy. Chapter 13 bankruptcy is beneficial for people who have some disposable income but not enough to pay off their debt. With this plan, debt is reorganized so debtors have an easier time paying things off.
Both Chapter 7 and Chapter 13 bankruptcy make it easier for debtors to start fresh. They also help stop creditors from pursuing collections.
The main thing to remember when choosing between a Chapter 7 or Chapter 13 bankruptcy is that you’re looking for debt relief, it just depends on what plans work best for you.
