What Are the Differences Between Chapter 7 Bankruptcy and Chapter 13 Bankruptcy?

When you think of bankruptcy you probably picture someone who has spent their money unwisely and tried to live a lifestyle that is well beyond his or her means. Most people probably figure that anyone who has to file for bankruptcy has no one to blame but him or herself. However, that really isn’t always the case. In fact, many people who have never had any credit or debt problems before suddenly end up in situations out of their control that causes them to file for bankruptcy. Some of those situations include unexpected medical debt, sudden loss of a job, divorce, or a medical condition or death.

The fact is, many financially responsible people end up in these kinds of situations and have no choice but to file for bankruptcy. If you are in this situation, it doesn’t mean you are a bad or irresponsible person. However, it does mean you probably need some help to get out of it.  Rest assured that you do have some options. Many people in Crown Point might not be aware that there are different kinds of bankruptcy. The two common types of personal bankruptcy are Chapter 7 and Chapter 13. They both are designed to get you out of debt and start taking positive financial steps forward again but they do have their differences as well.

Chapter 13 bankruptcy involves a repayment plan, which means, together with your creditors, you come up with a detailed strategy to pay off your debts. In some cases, certain creditors will require that you pay off of your entire debt. In other cases, you will only be required to pay off some or even none of your debt. This will largely depend on several important factors, including:

• How much money you are presently earning

• How much money you owe and what types of debt they are

• How much property or assets you have

Chapter 13 Bankruptcy also means you won’t lose any of your property as long as you can continue to make regular payments as agreed upon in your filing.

With Chapter 7 Bankruptcy you might lose some of your property because it is a liquidation filing. In other words, you ask the bankruptcy court to forgive the majority of your debts in exchange for the value of your assets. You will be able to keep your property that is considered exempt.

Each of these types of bankruptcy filings has advantages and disadvantages. Determining which one is right for you will depend on the specifics of your particular situation. If you need help deciding which kind of bankruptcy filing is best for you in Hobart, Gary, or Crown Point, please contact the Whitten & Whitten in Merrillville today. Click here or call us at 219-756-0555.