Discuss Chapter 7 and 13 with a Bankruptcy Lawyer

A bankruptcy lawyer can help you to make one of the biggest decisions about this filing process. That decision is based on which chapter you wish to file. As a consumer, either of these options is a possibility. They are very different. The outcome will be about the same, but if you qualify and what you need to do in each type is vastly different. Don't make a decision about what is right for you and your financial situation until you speak to your attorney about your options.

Do You Qualify?

One of the first things you have to do with your bankruptcy lawyer is determine if you qualify for Chapter 7, which is the form of total discharge. This process liquidates any assets you may own and uses those funds to repay creditors. Keeping that in mind, you also have to consider qualifications for this option. You will need to show that your income is at or belong the median income level for your state. The other option to qualify is to show that your expenses (which must include only approved expenses) are over your income and cannot be reduced. Most people will qualify for 13, since assets are not liquidated in this method.

Do You Own Assets?

If your home has a lot of equity in it or you own numbers vehicles, you may want to steer clear of 7. In that form, all non-protected assets above and beyond the exemptions provided by the state and federal government are seized and sold. If you do not own anything of real value or you want to lose those items, filing Chapter 7 is an option. On the other hand, you will not lose any assets if you file 13 (and you do not want to lose assets.) This option is best for those who do not want to liquidate.

The Game Plan

In a Chapter 7 case, your debt is charged within four to six months of filing, assuming you meet the qualifications. In a Chapter 13 case, you will spend the next three to five years repaying some of your debts. At the end of the period, you will have all other non-asset based debt discharged. This method is called reorganization because you will spend time making payments towards your debt.

Which one is right for you? This depends on your individual circumstances. When you work with a bankruptcy lawyer, you will learn more about those options and your concerns. You'll be well on your way to learning what this process is going to include and if you will lose anything as a part of it.