Bankruptcy is a complex art of law. There are a number of “chapters” available to give people the debt relief and financial fresh start they need. The chapters come from the United States Bankruptcy Code. The two most common types of bankruptcy filed by individuals or married couples are Chapter 7 bankruptcy and Chapter 13 bankruptcy. Which chapter is best for you will depend on your specific situation.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy erases all or most of your debts, without a repayment plan, and in general, allows you to keep most or all of your personal belongings. Chapter 7 eliminates credit card debt, medical debt, and most unsecured debts. Unsecured debts are debts that are not backed by anything. Meaning they do not have property attached as collateral. Generally, it is the simplest and quickest form of bankruptcy. And takes roughly four to six months to complete.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy is a reorganization of debts, creates a three to five-year repayment plan, and also allows you to keep most or all of your personal belongings. The repayment plan gives you a chance to catch up on mortgage arrears, missed car payments, back taxes, and other debts. To qualify, you must have a steady source of income, such as from a job, self-employment, a business, retirement income, or social security.
Which Chapter is Best for You?
While Chapter 7 and Chapter 13 operate very differently, they have many of the same powers. Either chapter will immediately put a stop to collection phone calls, wage garnishment, bank levies, lawsuits filed by creditors, and stop (either temporarily or permanently) an automobile possession or foreclosure sale of real property.
Chapter 7 is best for people who have significant debt that they cannot reasonably pay off within a few years, do not have mortgage arrears or an underwater second mortgage, and can meet the Means Test for qualifying for Chapter 7 relief.
Chapter 13 is best for people with steady income who:
- Are homeowners who want to keep their house but have fallen behind on their mortgage payments. Chapter 13 creates an opportunity to catch up on mortgage arrears.
- Are homeowners who have an underwater second mortgage. Chapter 13 creates an opportunity to eliminate the second mortgage.
- People with income too high to qualify for Chapter 7 relief. Though, many high-income earners qualify for Chapter 7. If you have been told you earn too much money to qualify for Chapter 7 bankruptcy, we encourage you to consult with an experienced bankruptcy attorney.
Which chapter of bankruptcy is best for you is specific to your situation. Many bankruptcy attorneys offer free consultations. Take advantage of this and explore all of your options on getting the financial relief you need.
Here at the Law Office of Barbara B. Braziel we offer free consultations to anyone in Savannah, GA and the surrounding area. We are knowledgeable and experienced attorneys who specialize in bankruptcy and debt relief. We have over 35-years of experience. We’ve helped thousands of people get out of debt and have the fresh financial start they deserve.
We are a debt relief agency. We help people file for bankruptcy relief under the U.S. Bankruptcy Code.