Confused about what you should file, Chapter 7 or Chapter 13? Based on your current circumstances, you may find one choice outdoes the other. Chapter 7 and Chapter 13 are no same, and carrying different potential consequences. Both, however, can help defaulters make a suitable move toward debt repayment.
Chapter 7 bankruptcy San Antonio, otherwise known as liquidation, is a legal choice that helps people discharge their debts. This also means having to capitulate some of your valuable assets, such as cars, additional properties or even cash, sometimes.
Chapter 13 bankruptcy is a legal option that helps you repay some of your debts, but also leaves your property untouched by completing a 3-5-year repayment plan.
If you’re the one, considering filing bankruptcy any time soon, be sure you know which type of debt you owe and which type of bankruptcy you’re going to file. Neither bankruptcy options allow you to emancipate the following:
- Alimony
- Child support
- Certain taxes
When should you file Chapter 7?
Chapter 7 makes a great option to consider when you are having little to no discretionary income. You just have to qualify a Means Test in order to prove so, and you are good to file Chapter 7. To have a sound understanding of Chapter 7 and if you should file it, look through:
It helps minimize your monthly debt-repayment stress
When a debt is discharged through Chapter 7, it means you no more have to disburse that debt back. However, bear one thing in mind that not all debts are dischargeable through Chapter 7 bankruptcy; there are exceptions to that. This is exactly where you are recommended to consult an attorney nearby.
The debt collectors won’t harass you anymore
When you are completely destitute to repay your debts, Chapter 7 is the right legal option to embrace. It can be a great tool to restrict frequent calls from the debt collectors and also prevent them from taking any legal action against you. After you file for this bankruptcy, some of your creditors may get temporarily constrained from collecting any money from you or even calling you.
Note that you may possibly lose some assets
One of the key consequences of filing Chapter 7 is potential loss of assets. Whether you have to lose any asset or cash is subject to the law in your state and whether you hold in equity in certain assets.
When should you file Chapter 13?
Consider filing Chapter 13 when you own a property that you don’t wish to let go, despite being over your head in debt. When you, with a regular income, file Chapter 13, it makes you a debt repayment plan, which is basically an installment plan to pay the creditors over a span of 3-5 years. Following are some important factors that you should know before filing Chapter 13 bankruptcy:
File Chapter 13 when you have a decent income source
To file Chapter 7, you’ve to prove that you can’t repay the debt anymore through the Means Test. During the test, you basically prove that your income is lower than the median income requirement of your state. While, on the other hand, you can file Chapter 13 with an income more than your state’s median income.
Chapter 13 helps stop debt collections as well as foreclosure process
Let’s say, you’re a struggling property holder, Chapter 13 is the legal solution you’re looking for. If you’re likely to face foreclosure process any time now, filing for this bankruptcy type will give you sometime to catch-up on your mortgage dues. Moreover, any debt liquidated during Chapter 13 means you will no longer receive calls from debt collector’s agency.
It helps you repay your debt
Chapter 13 bankruptcy San Antonio provides more cost-effective and convenient way for debt repayment. This, in fact, makes you a comprehensive repayment plan to repay some or all of your debts. Under this bankruptcy Chapter, you can easily make a consolidated payment toward your debts, based your repayment plant. Your creditors will then receive this lump payment. Some repayment plans can also help reduce the amount of your monthly payment over the span of 3-5 years.
It takes no less than 3-5 years to fully discharge your debts
While Chapter 7 helps you give off your debts relatively faster, Chapter 13 takes 3-5 years for the same. During Chapter 13, you get a repayment plan, which determines your further payment installments.
If you fail to stick to the repayment plan, you lose Chapter 13 status, and also assets sometimes
If you fail to pay under the repayment plan, your chapter 13 status would be abolished or sometimes converted to Chapter 7, which means your properties are at stake again. Well, that’s not it. You may also lose your Chapter 13 status or get it converted to chapter 7, if you forget to file compulsory taxes during the procedure or do not pay domestic support obligations, for instance alimony and child support, post filing.
Why should you always consult an attorney while filing either bankruptcy?
One can certainly go it alone, but are you really aware of the required laws and procedures involved while you approach to file Chapter 7 or 13? People do commit mistakes while filing for bankruptcy and the most common mistakes include:
- Filing bankruptcy when it is not the right choice
- Filing the wrong bankruptcy type or Chapter
- Not filling out the Form correctly
- Unable to use bankruptcy exemptions accurately
- Avoiding creditors’ meeting
- Picking up a wrong Chapter 13 repayment plan
Committing either of these mistakes means losing your chance to file bankruptcy. Filing bankruptcy is one of the biggest financial decisions you’d make. If it’s not done right, conditions can be worse off. So, talk to our bankruptcy attorney San Antonio now.
We are open 24/7. Contact us on 888-297-6203