We have all been in some form of financial difficulty at some time or another. Sometimes the financial difficulty is so severe that you cannot pull yourself out of it by skimping and saving. In these cases, filing for bankruptcy may be the best solution for you. Though filing for bankruptcy can be seen by some as a bad thing, it could be beneficial and help you to gain some control over your financial life. How do you know which chapter of bankruptcy to file? What are the differences between Chapter 7 and Chapter 13 bankruptcy? If you or a loved one are considering filing for bankruptcy, contact an experienced Maryland bankruptcy attorney to help you understand the pros and cons of bankruptcy and help you decide which one is better for you.
Differences Between Chapter 7 and Chapter 13 Bankruptcy
When you are considering filing for personal bankruptcy, there are two main ways to file under the United States Bankruptcy Code: Chapter 7 and Chapter 13, and determining which one to file depends hugely on your income, debts, assets, and financial goals.
Chapter 7 is considered a liquidation bankruptcy in which the goal is to discharge you of unsecured debts such as credit cards and medical bills. Under Chapter 7 bankruptcy, you must fall below a certain income level to be eligible and generally takes less time than a Chapter 13 bankruptcy filing. To be eligible for Chapter 7 bankruptcy, you must be considered low income and have little to no disposable income.
Chapter 13 bankruptcy is considered a reorganization bankruptcy as it is designed for individuals who have “regular” income who are able to pay back a portion of their debt through some form of repayment plan. For many who do not qualify for Chapter 7 bankruptcy due to exceeding the income threshold, Chapter 13 may be the best case scenario. Under Chapter 13 bankruptcy, you are allowed to keep all of your property, which includes non-exempt assets as well and is best when you have equity in a home and some other property and you would prefer to keep it.
For those instances in which you may be somewhere in the middle, speaking with an attorney is best so that you can be informed of the pros and cons of each and so you can be walked through the bankruptcy process.
Need Legal Advice?
Filing for bankruptcy is nothing to be ashamed of and can help you get closer to financial freedom. However, it is important to know the difference between Chapter 7 and Chapter 13 bankruptcy to ensure that you are filing for the correct one. Though you can file for bankruptcy without an attorney, it is not advisable as filing for bankruptcy can be a difficult process and can be even more difficult and overwhelming to navigate. Because of this, seeking legal advice and representation is in your best interest. If you or a loved one is considering filing for bankruptcy, contact an experienced Maryland bankruptcy attorney at Hassan, Hassan & Tuchman, PA to help you determine what is best for your situation. Contact our office today.