For me, filing for personal bankruptcy is the best option if I am too much in debt and I know that Chapter 7 vs Chapter 13 is an important thing to learn about personal bankruptcy. Some people do not want to file for bankruptcy because they are too embarrassed to admit that they no longer have the financial capability to pay off their bills. Well, not for me. I think this is an option that everyone in a financial jam (like me!) should consider because this will help me pay off my bills without having to borrow money from banks or my stingy friends.
There are a few things that I need to point out about these two methods of filing for bankruptcy. Let’s say for example I am thinking of filing for bankruptcy.
Chapter 7 Vs Chapter 13- Similarities And Differences
If I file for either Chapter 7 or Chapter 13, I need to attend some sort of credit counseling seminar 180 day before I file my bankruptcy petition. The main similarity is the end result, which is to pay off all my debts with whatever means at my disposal (whoopee!).
The main difference is that for Chapter 7, I am required to liquidate my available non-exempt assets and I can only keep my exempt assets while in Chapter 13, I will be given a payment plan within three to five years. In Chapter 7, the amount of money that I have accumulated after selling all my assets or properties will be distributed among my creditors. The law specifies which creditors to prioritize, so it is no longer my problem to choose which creditor to pay off first.
In Chapter 13, the good news is that I do not need to sell anything. But I have to use my disposable income, or the amount of money left over after I have paid for my basic needs, to pay off my debts.
Who Should File For Chapter 7?
If I used to have a lot of your money and invested most of them in a home or business, I should file for Chapter 13 because this bankruptcy petition does not require an individual to liquidate his assets. In short, I don’t need to sell anything. I can also file for Chapter 13 if I have excess cash left after paying for my basic needs, which I have already explained earlier.
Who Should File For Chapter 13?
On the other hand, if I have income but it only barely supports my necessities, Chapter 7 is the perfect one for me. I just need to sell my assets be since I don’t have other means to pay off my debts. I don’t need to worry, though, because some of my assets will be left behind since I am not required to sell the house that I am living in. This is according to Chapter 7. After all, the law doesn’t want us to be homeless, does it?
Chapter 7 Vs Chapter 13 Reminders
Remember that you have to meet certain requirements to be able to file either Chapter 7 or Chapter 13. I also need to further understand Chapter 7 Vs Chapter 13 before filing for bankruptcy to know which one suits my financial situation best.