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Should You File For Chapter 7 or Chapter 13 Bankruptcy?

January 17th, 2017 | By



Most of the bankruptcy cases in the country are filed as Chapter 7 or Chapter 13, but how do you know which one is right for you? Depending on your income, assets, debts, and future financial goals, one may be better for you than the other, and there are major differences between the two types. If you’re not sure about these things, it’s a good idea to talk to a qualified bankruptcy attorney in Atlanta or city near you.

In simple terms, Chapter 7 bankruptcy is designed to liquidate unsecured debts like credit card and medical bills, and to qualify for this type, you must have little to no disposable income. In contrast, Chapter 13 bankruptcy is designed to allow for financial reorganization for people with high enough income to afford repayment plans outlined by the court, in order to save certain assets.

To go more in depth, here are some of the major differences between Chapter 7 and Chapter 13 bankruptcy:

Chapter 7

  •       Both individuals and business entities may file
  •       Discharge is typically received within 3-5 months
  •       Trustee can sell your unsecured property to pay off creditors
  •       Some assets may not be protected, like homes, boats, etc…
  •       Cannot be applied to student loans
  •       Offers a quick way for people with low income to get a clean start

Chapter 13

  •       Only individuals can file
  •       Discharge is typically received within 3-5 years, after completion of repayments
  •       Must have income high enough to demonstrate ability to make payments and thus, save certain assets
  •       Trustee cannot sell your property to pay creditors
  •       Can be applied to student loan principal balance, if eligibility requirements are met
  •       Offers a longer term solution to debt management for people who have valuable assets that they’d like to keep

Perhaps with this information, you have a better idea of which filing type you are eligible for, but if you still have questions that are specific to your case, please reach out to an experienced Atlanta bankruptcy lawyer. Considering bankruptcy is never an easy decision, and should not be something that you take lightly. Your personal income and debts, as well as what you want your financial future to look like, can make a difference when deciding between Chapter 7 and Chapter 13 bankruptcy.

If you need help filing your case, or determining the best type for your circumstances, get in touch with us today. We can get you on the road to financial recovery.  

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