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The Big Decision: Chapter 7 v. Chapter 13

For Americans who are considering whether to file for personal bankruptcy, there are many decisions. For instance, you may have asked yourself whether you should hire an attorney, when you should file, or how long it might take you and your family to recover financially, professionally, or emotionally from your bankruptcy filing.


In a personal bankruptcy, there are a lot of questions. However, few questions are more important or challenging for a debtor than whether you should file for Chapter 7 or Chapter 13 bankruptcy. If you find yourself at this crossroads, it may be time to speak with one of the dedicated bankruptcy professionals at the law firm of Fears Nachawati.


Chapter 7 bankruptcy, also known as liquidation bankruptcy, is helpful for debtors who primarily hold unsecured debt, such as credit card expenses, and who don’t have a lot of leveraged assets, such as a home or car. Also, Chapter 7 debtors must pass a statutory “means test” in order to qualify for liquidation bankruptcy. For young workers who are just starting out in life or for an older family that was unexpectedly slammed by medical expenses, Chapter 7 relief may be right for you.


By contrast, Chapter 13 bankruptcy is a kind of restructuring of debts in which personal debtors pay their creditors for a longer period of time – sometimes as long as five years – but are allowed to keep certain assets that they would lose in a Chapter 7 bankruptcy. For higher income debtors who do not qualify for Chapter 7 under the means test and for asset-rich, cash-poor, overleveraged debtors, Chapter 13 may be the best approach.


Do you fall somewhere in between Chapter 7 and Chapter 13? Worried that you don’t know which one is right for you and your family? Your free consultation is just a phone call or email away. With years of experience and dedicated expertise, our attorneys are ready to give you the financial and bankruptcy advice you need. Talk to us today.


The Big Decision: Chapter 7 v. Chapter 13