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Differences Between Chapter 7 and Chapter 13 Bankruptcy

For many people facing overwhelming debt in America, the concept of bankruptcy can feel like a welcome way to escape their financial troubles. What most people do not understand, however, is that there are actually multiple forms of bankruptcy, and that not everyone should use every option. For the most part, Chapter 7 or Chapter 13 are the top choices for people filing for personal bankruptcy.

If you are thinking of filing for bankruptcy, look over these basic breakdowns first and then consult with a bankruptcy lawyer.

Chapter 7 Bankruptcy Specifics

This is the sort of bankruptcy most people imagine – an attempted total wipe of all unsecured debts through liquidation. For many people, they need to file for Chapter 7 due to credit card debt and staggering medical bills. Due to the fact that this will eliminate essentially all debt, you have to be aware that you are risking much of your assets in the process to collections, such as your home or automobile.

Keep these key points in mind when considering Chapter 7:

  • You will need to pass a Chapter 7 Means Test
  • You need to have little or no disposable income
  • A trustee will be appointed to oversee the proceedings
  • You may lose your valued property to creditors
  • Your credit score could be negatively affected

Details About Chapter 13 Bankruptcy

To avoid losing their property, people can consider filing for Chapter 13 bankruptcy. This is not a total liquefaction of debt but reorganizes payback methods instead to take stress and time constraints off your shoulders. Typically, you will be able to keep all or most of your own property since you are paying back all or most of your debts over the course of three to five years. In addition, it is usually easier to recover your credit score after filing for this form of bankruptcy. However, Chapter 13 is not for business entities and it cannot be used by people who make too much money.

Get Help from a Professional

Bankruptcy is not a light matter, regardless of the details of your case. Whether you need to file for Chapter 7 or Chapter 13, it is a big decision that should not be made alone. Partner up with Orlando bankruptcy attorney Elayne M. Perez instead. With more than 20 years of collective experience, our law firm can certainly find a way to guide you through your financial situation in a way that works for you.

Please do not hesitate to get the help you need. Call 407-749-1591 to start finding peace of mind today.

Categories: Bankruptcy
Perez Conrique Law - Orlando Foreclosure Attorney
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The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship.