Chapter 7 v. Chapter 13 Bankruptcy
Nearly any individual or business can seek protection of the United States bankruptcy courts if debt has simply become unmanageable. However, not every individual or business can file for any given type of bankruptcy. For example, not every individual will qualify for Chapter 7 bankruptcy, as there is an income means test that must be met. Further, with Chapter 13 bankruptcy, the debtor must show he or she has enough disposable income to make monthly payments as part of a bankruptcy repayment plan. Because there are a number of variables involved in the bankruptcy decision-making process, it is important to consider seeking the advice of a qualified Bankruptcy Attorney.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is also known as “liquidation bankruptcy” because your debts are satisfied by selling your assets. In order to qualify for Chapter 7 bankruptcy, you must be able to meet a means test that demonstrates you have little or no disposable income that could be used to pay off your debt through a repayment plan. The Chapter 7 bankruptcy process does not take very long for debtors, as they are able to discharge most if not all of their debt within four to six months. This is a good way to eliminate debt in a short period of time, but is only an option for those with a fairly low income. Because Chapter 7 bankruptcy liquidates your assets, you may have difficulties keeping your home or other property. At the same time, it is unlikely that a Chapter 7 debtor will have a significant amount of property to sell in order to satisfy some or all of their debt.
Chapter 13 Bankruptcy
Unlike Chapter 7 bankruptcy, Chapter 13 bankruptcy requires the debtor to pay back his or her debt through an approved repayment plan. In order to qualify for such a repayment plan, the debtor must demonstrate that he or she has enough disposable income to make the required monthly payments. The entire Chapter 13 bankruptcy process could take anywhere from a few years to five or more years. This may seem like a long period of time, but without the assistance of bankruptcy, you may be paying off your debt for decades to come.
Another benefit of Chapter 13 bankruptcy is that you get to keep your property (such as a home or car). This is beneficial for those who are able to manage their repayment plan and stay in their homes for the entire bankruptcy process. To determine which type of bankruptcy you may be eligible for and which one is better for your unique financial circumstances, you need to be fully informed on what the benefits are of filing for either Chapter 7 or Chapter 13 bankruptcy.
Contact The Law Offices of Georgette Miller and Associates, P.C. Today
The bankruptcy process in the United States is complex because there are multiple ways to reach the same result – the elimination of your debt. Seeking the advice of a seasoned Bankruptcy Attorney is one of the most important decisions you make when considering whether or not bankruptcy is right for you. At the Law Offices of Georgette Miller and Associates, P.C., our experienced bankruptcy attorneys help individuals with the bankruptcy process on a daily basis. Having a representative by your side makes the bankruptcy process less stressful. To learn more about what bankruptcy options are available to you, contact the Law Offices of Georgette Miller and Associates, P.C. today by calling (866) 96-GMLAW to schedule an initial consultation. Our attorneys provide legal services to individuals and businesses in and around Philadelphia, PA, New York, New Jersey, Washington, D.C., and Baltimore, MD.