How to Decide Between Chapter 7 and Chapter 13 Bankruptcy

When you are considering personal bankruptcy, you are likely looking at the possibility of either Chapter 7 bankruptcy or Chapter 13 bankruptcy. While individuals do occasionally file for Chapter 11 bankruptcy, this only happens when they are ineligible for Chapter 13 bankruptcy as a result of having too much debt, and it is a relatively uncommon situation. As you are looking into the possibilities for Chapter 7 or Chapter 13 bankruptcy, you may be asking yourself: How am I supposed to decide between Chapter 7 and Chapter 13 bankruptcy?

Ultimately, it is unlikely that you will be eligible for both Chapter 7 and Chapter 13 bankruptcy at the same time since they have quite different eligibility requirements. Instead, you should be looking at the process for each type of bankruptcy and asking yourself the question: am I most likely to be eligible for Chapter 7 bankruptcy or Chapter 13 bankruptcy? And if you are seeking the particular benefits of one of these types of bankruptcy, you should be discussing eligibility requirements with an Oak Park bankruptcy lawyer as soon as you can. In the meantime, consider the following information.

Rather Than Choosing Between Types of Bankruptcy, You Should Think About Eligibility Requirements

Under the Bankruptcy Code, most consumers who are planning to file for bankruptcy will not be equally eligible for Chapter 7 and Chapter 13 bankruptcy based on their individual financial circumstances. Rather, their financial circumstances will likely qualify them much more obviously for one type of bankruptcy over the other. Thus, rather than thinking about choosing between existing types of bankruptcy, you should be thinking about eligibility requirements for different types of consumer bankruptcy and how you can meet them.

In order to qualify for Chapter 7 bankruptcy, which is a type of liquidation bankruptcy, you will need to show that your income and assets are sufficiently low that it would not be an abuse of the bankruptcy system for you to go through a liquidation bankruptcy and receive a discharge. To prove this, you will typically need to pass the “means test.”

For Chapter 13 bankruptcy, you will need evidence that you are a wage earner who can keep up with the monthly payment schedule associated with a reorganization bankruptcy.

Benefits of Chapter 7 and Chapter 13 Bankruptcy

Are there reasons you might want to try to qualify for one type of bankruptcy over another?

The primary benefit of Chapter 7 bankruptcy is that it allows for the discharge of eligible debts within a short number of months after filing for bankruptcy, giving the debtor a fresh start. There are a few key benefits of Chapter 13 bankruptcy, including that it offers consumers a way to reorganize and get caught up on debts, and, especially, to stop a foreclosure and remain in their homes.

Contact a Bankruptcy Attorney in Oak Park

If you have questions about your eligibility for any type of consumer bankruptcy, or if you are trying to determine how to become eligible for a specific type of bankruptcy given its particular benefits, you should get in touch with one of our experienced Oak Park bankruptcy attorneys as soon as possible. Do not hesitate to reach out to our firm to learn more about the services we provide to consumers in the Chicago area. Contact the Emerson Law Firm today for more information.



See Related Blog Posts:

Assets Commonly Exempt in Liquidation Bankruptcies

Who Should Be Thinking About Bankruptcy?




Comments

Post a Comment

Popular posts from this blog

Payday Lending and Predatory Lenders in Illinois

If you are in substantial debt in the Chicago area and are living in a paycheck-to-paycheck cycle, you may have taken out a payday loan to make ends meet. While payday lending is illegal in a number of states due to the predatory nature of these loans, it remains legal in Illinois. As a result, many debtors in the state have used payday lenders, and far too many of those borrowers cannot repay what they owe. According to a recent article from Progress Illinois , consumers have filed complaints about payday lenders in the state, illuminating a need for federal rules that address harmful lending practices . Predatory Payday Lenders and Protections for Consumers Due to the perceived predatory nature of payday loans, twelve states in the country have banned these lenders from operating completely, according to a fact sheet from loans.org . The states that currently have laws prohibiting payday lenders from operating include Arkansas, Arizona, Connecticut, Georgia, Mary...
Read more

Phantom Debt Collection Scams on the Rise in Illinois

Have you been contacted by a person claiming to be a debt collector who is seeking to recover a debt you allegedly owe? If so, you are not alone. According to a recent report from CBS Chicago , such parties claiming to be debt collectors are on the rise, and they are scamming Chicago-area residents. These alleged debt collectors are part of schemes known as “phantom debt collection scams,” since they involve the attempt to collect on a debt that the consumer does not actually owe. How can you avoid becoming a victim in a debt-collection scam ? What should you do if you have been targeted by a fake debt collector? How Do Phantom Debt Collection Scams Work? Now, you might be thinking to yourself: I would never agree to make payment on a debt that I did not owe. But the scam is not always that simple. Parties at the center of debt-collection scams often target consumers who do actually owe debts (to someone or to some entity), and they prey on the fact that these c...
Read more

New Information on Debts That Bankruptcy Cannot Discharge

If you are thinking about filing for bankruptcy in the Oak Park area, it is important to know that certain kinds of debts cannot be discharged in a bankruptcy case. Under U.S. bankruptcy law, these are known as non-dischargeable debts, or exceptions to discharge. There are certain types of debts that have long been identified clearly as non-dischargeable debts, while there are misconceptions about other types of debts that may or may not be dischargeable. As an article in CNBC discusses, the U.S. Supreme Court recently issued a ruling in the case of Bartenwerfer v. Buckley , which clarifies that debts incurred due to another party’s fraud cannot be discharged in an individual’s bankruptcy case. Our Oak Park bankruptcy attorneys can explain the Court’s recent ruling and provide you with additional information on dischargeable and non-dischargeable debts. Supreme Court Says Debt Incurred Due to Another’s Fraud is Non-Dischargeable The recent Bartenwerfer case involved a debtor attempti...
Read more