Have Multiple Debts? Want To File For Bankruptcy? Find Out How To Choose A Chapter

Bankruptcy can be a complicated process.  It is usually best to be sure that you have the advice of a professional bankruptcy attorney before deciding which type of bankruptcy may be right for you.  However, there are some general guidelines for each chapter that can help you determine which one may best meet your needs.  Before you file, discuss your case with an attorney to be sure you are making the right decision.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy is also called a “liquidation” bankruptcy.  This is because Chapter 7 is designed to liquidate any assets for distribution to creditors and to provide a discharge for unsecured debt.  This means that after a Chapter 7 bankruptcy is discharged, you will not owe any more money on your debts unless they are exempt from the bankruptcy. While Chapter 7 is designed to help those without significant assets, you may be able to keep some or all of your assets through exemptions or other measures.  For example, some people are able to keep their homes because they reaffirm the secured debt with the creditor.  In other cases, homeowners decide to let the mortgage holder take the property.  Through the proper use of exemptions, you can often save enough from your bankruptcy to start over with the basic necessities. Chapter 7 is generally best for those who have few secured debts and many unsecured debts, such as credit card balances.  There are limits to how much money you can earn and how much debt you can discharge through a Chapter 7; if you do not qualify for this type of bankruptcy, you may have to file a Chapter 13.

Chapter 13 Bankruptcy

If you do not qualify for a Chapter 7 bankruptcy, you can usually still file a Chapter 13.  This means that you agree to pay your creditors a certain amount on the balances you owe by setting up a plan through the trustee.  Every month, you give the trustee money and he or she distributes it to your creditors. Chapter 13 is often appropriate for those who have significant assets or who want to keep the collateral used for a secured loan.  You must have a regular income and meet other tests to qualify for Chapter 13

Choosing the Right Chapter

Choosing the right type of bankruptcy can be difficult.  Contact the bankruptcy attorneys at Oswalt Law Group in Phoenix for help.