CALL NOW!
FREE PHONE/VIRTUAL CONSULTATION

Tips for Choosing between Chapter 7 and Chapter 13

Chapter 7 And Chapter 13 Bankruptcy Tampa Florida.Chapter 7 or Chapter 13 – What’s Better for Your Situation

Chapter 7 and Chapter 13 bankruptcy are quite different. How do you know which chapter of bankruptcy is better for you?

For many people, there won’t be a choice. They’ll qualify for whichever type of bankruptcy is the better option for them and proceed with little to no choice in the matter. Everyone filing is subject to a means test that evaluates assets, debts, and other financial criteria, and for most people, the best choice is clear.

You can read more about the bankruptcy means test here.

But what if you fall into the group of filers who do have a choice?

Is one option better than the other? And what if things change at some point and your original choice is no longer the best option?

Here’s what you need to know when you’re faced with a choice between Chapter 7 and Chapter 13.

Chapter 13 vs. Chapter 7

Chapter 13 bankruptcy filing allows you to discharge a wider variety of debts than Chapter 7. Chapter 13 filers also have a longer period of protection under the automatic stay. And in most cases, Chapter 13 also allows you to retain ownership of more of your assets than Chapter 7. But this doesn’t mean Chapter 13 is always better than Chapter 7.

Chapter 13 requires you to make payments on your debt for a period of three to five years. It’s sometimes called “wage earners’ bankruptcy” for this reason. You aren’t free and clear of your debts for a long time in Chapter 13 and if you have no income you aren’t going to qualify for Chapter 13 bankruptcy filing.

But in some cases, a person will qualify for both types of bankruptcy and need to make a decision. It might seem as if Chapter 13 is the preferred option because you get more protection and are allowed to keep more assets, in exchange for repayment you can afford.

This isn’t always the case.

Someone who knows his or her earnings will increase over the next three to five would likely be better served by filing for Chapter 7.

One of the benefits of Chapter 13 is that if something changes during your repayment period, you can modify the amount of your monthly payment. If you lose your job or have a decrease in income, the court can be asked to reduce your payments. It’s even possible in drastic situations to convert your Chapter 13 case to a Chapter 7.

Chapter 13 Requires a Long-term Commitment

But the opposite is also true. If you see an increase in income during that period, the trustee would ask the court to modify your payments to reflect this increase. You’d be earning more money but a lot of the increase would go to creditors, whereas in Chapter 7 the increase would be a moot point because your case would be closed. You’d be able to pay more toward the debts you still owe that were not discharged in Chapter 7, but the situation would be under your control. You’d be choosing to pay creditors more, not the trustee.

Chapter 7 is about the here and now and decisions by the court are based on your current situation. In Chapter 13, the court evaluates your current situation, but will also look at future developments. You’re making a multi-year commitment to having your financial situation exposed to the court, so you if you reasonably expect your financial situation will significantly improve during that time, you might want to think twice about filing for Chapter 13.

If you’re unsure which chapter of bankruptcy is right for you or you need assistance assessing your financial prospects in the near future, we can help. Contact the Law Office of Robert M. Geller at (813) 254-5696 to discuss your situation.

Archive

Tampa Bankruptcy Law Blog

How Does Claiming Bankruptcy in Florida Affect Your Children?

Claiming Bankruptcy in Florida Understanding how claiming bankruptcy in Florida affects your children is an important part of determining whether...
Read More

Claiming Bankruptcy in Florida: What Happens When You File for Bankruptcy and Your Spouse Does Not?

Claiming Bankruptcy in Florida You already know how much the things you do affect your spouse when you are married....
Read More

Should You Pay Back What You Owe Loved Ones Before You File for Bankruptcy?

Florida Bankruptcy Laws It’s common for people who are struggling financially to turn to their friends and family for help....
Read More

Bankruptcy and Family Law: Does Filing Affect the Child Support I Pay or Receive?

Bankruptcy and Family Law If you’re like many people, the well-being of your children is your most important priority. Struggling...
Read More

5 Tips for Overcoming the Emotional Toll of Bankruptcy

Florida Bankruptcy Attorney Getting through the bankruptcy process is about more than just improving your finances. Working with a Florida...
Read More

Bankruptcy and Divorce: The Far-from-Perfect Storm

Bankruptcy and Family Law Bankruptcy and divorce separately are two of the most stressful events you can experience in your...
Read More

Does the Pandemic Have You in a Holding Pattern? Here’s How to Know When to File for COVID Bankruptcy

COVID Bankruptcy If you’re struggling to make ends meet and you feel as if your life is on hold because...
Read More

Will Your Favorite Retailer File for Business Bankruptcy in 2021?

Business Bankruptcy 2020 was a tumultuous year and many of the financial challenges caused by the pandemic are expected to...
Read More

Boosted and Extended Benefits Keeping Unemployed Afloat – But For How Long?

Unemployment Benefits Were you one of the millions of people who ended up out of a job and using unemployment...
Read More

Should Bankruptcy Laws Be Adjusted Because of COVID-19?

Bankruptcy Laws The COVID-19 pandemic brought a lot of changes throughout 2020 and many are expected to continue into 2021...
Read More

Bankruptcy

For The Next 5 Days GET A FREE BOOK About Bankruptcy

Learn More

Infographics

We are A Debt Relief Agency.
We help people file for bankruptcy under the Bankruptcy Code

Pay Online Bankruptcy Courses Newsletter Subscription

NACBA Logo avvo1 avvo2 avvo3 LEA BBB Logo RG Seal

Call For A Free Initial Consultation

813.254.5696

Tampa Office

Law Offices of Robert M. Geller, P.A.
807 West Azeele Street
Tampa, FL 33606
T: (813) 254-5696
T: (800) 853-7549
F: (813) 253-3405

Map And Directions

St. Petersburg Office

Law Offices of Robert M. Geller, P.A.
125 5th Street South
(Wells Fargo Financial Center)
2nd Floor, Suite G
St. Petersburg, FL 33701
T: (727) 532-3939

Map And Directions

Pasco Office

23526 State Road 54
Lutz, FL 33559
T: (813) 336-2320

Map And Directions