When people file for bankruptcy, they must choose between Chapter 13 and Chapter 7. Working with a Chapter 7 or Chapter 13 bankruptcy attorney in Tampa can help you with this decision.
The main difference between the two is that Chapter 13 lets you keep your property while Chapter 7 allows the court to take your property and assets and sell it to pay off your debts.
The other big difference is that with Chapter 13, you must make monthly payments to a trustee for three to five years. In Chapter 7, there is a one-time payment that comes from the sale of your assets. If you have no assets to sell, creditors receive nothing.
In addition to how these two types of bankruptcy work, there are also differences in who qualifies and what debts can be included in the bankruptcy.
It’s important to speak to an attorney before you make any decisions. Choosing the right chapter of bankruptcy is an important part of resolving your financial struggles. Your bankruptcy attorney will help you with the bankruptcy means test that determines your qualifications for Chapter 7 or Chapter 13. They can also provide information regarding the pros and cons of filing for a particular type of bankruptcy.
What Should You Know about Chapter 13 and Chapter 7 Bankruptcy Laws?
Chapter 13 Bankruptcy is Available to Individuals with Regular Income
Sometimes called “wage earner’s bankruptcy,” Chapter 13 includes a monthly repayment schedule. This means you must be able to afford the payments to qualify for Chapter 13.
You can learn more about Chapter 13 repayment plans here.
Chapter 13 Bankruptcy Can Help You Avoid Foreclosure and Other Aggressive Debt Collection Measures
Chapter 13 is usually ideal for people with high-value assets, such as a home. Even if you’ve fallen behind on your mortgage payments and you’re facing foreclosure, bankruptcy might be able to help.
Chapter 7 Bankruptcy Eliminates Most, If Not All of Your Debt through Discharge
Chapter 7 provides more immediate relief and removes your legal obligation to repay the debts you owe. For many people, this is the ideal option to resolve their crushing financial debt.
Chapter 7 and Chapter 13 Both Affect Your Credit
Some people are reluctant to consider bankruptcy because of the damage it does to their credit. What they fail to understand is that they are doing at least as much damage – maybe more – by ignoring the problem. Juggling debts and “kicking the can down the road” does nothing to improve your credit score. You’re better off taking action to resolve the problem and then move forward, focused on improving your credit.
Contact a Chapter 13 Bankruptcy Attorney in Tampa to Learn More
Both Chapter 7 and Chapter 13 are helpful in getting rid of debt. It might seem as if Chapter 7 is always the best option if you qualify because it eliminates so much debt. However, for some people, Chapter 13 is better because it offers greater protection of assets.
The best way to decide which one is right for you is to talk to a lawyer.