Money can be a fickle thing – when there’s enough of it, life is good. However, if you lose all your money, whether through debt, job loss, or bad financial investments, life can all too quickly turn sour.
When this happens and you find yourself in need of serious debt relief, filing for bankruptcy might seem like the best way to go. However, it might not be the right choice.
You’re probably wondering if it’s better to file Chapter 7 or Chapter 13. First, you need to understand the differences in these bankruptcy types.
Chapter 7 Bankruptcy
Chapter 7 is total liquidation of your assets. That means that anything you own (whether of value of not) has to be sold off to pay your creditors, leaving you with no possessions or money afterward. However, this type of bankruptcy can be good, as it can eliminate most unsecured debt, is very fast and your creditors cannot bug you after the automatic stay goes into effect.
Chapter 13 Bankruptcy
Chapter 13 is a bit different. This type of bankruptcy is essentially an adjustment of debts for a person with a regular income. This is the best option if you have a home that you want to keep and if you have regular income. You will find that this type of bankruptcy allows you to keep most of your property and spread out your debt payments. You have from three to five years to pay off your creditors, and you will make only a single monthly payment for all of them.
Bankruptcy is suited for different types of debtors. When you find yourself in need of debt relief, speak with an attorney or credit professional to help you determine the best course of action for your situation.