If you are having trouble paying your bills, you may be considering filing for bankruptcy. As an individual, there are two different types of bankruptcies you can file. You can file a chapter 7 bankruptcy or a chapter 13 bankruptcy Many people often wonder what the differences are between these two types of bankruptcy filings. Read on to learn a few of the key differences between a chapter 7 bankruptcy filing and a chapter 13 bankruptcy filing.
Income Requirements
The first major difference between a chapter 7 bankruptcy filing and a chapter 13 bankruptcy filing is the income requirements. As a general rule of thumb, you can only file for chapter 7 bankruptcy if you have a below-median income level based on the state you reside in. Each state has what is known as a means test to determine if you have the money to pay back some or all of your debts based on where you live and the amount of money you make. If you make too much money based on the state you live in, you may not be eligible to file for chapter 7 bankruptcy, and thus, may only be eligible to file for a chapter 13 bankruptcy.
Assets
Another major difference between a chapter 7 and a chapter 13 bankruptcy filing is the assets you are paying for and whether you wish to keep those assets. In most cases, when you file chapter 7 bankruptcy, you are giving up any cars or homes you may have loans out for currently, and discharging that debt. You simply cannot afford to keep making those payments with this type of bankruptcy filing. With a chapter 13 bankruptcy, you are working toward restructuring those debts so you can keep those assets. This is ideal for those that want to continue paying their car or home loans.
Discharge Time
The last major difference between a chapter 7 and chapter 13 bankruptcy filing is how long it takes to get the debt discharged and the bankruptcy complete. In most cases, a chapter 7 bankruptcy filing is complete within a matter of months. A chapter 13 filing can take up to five years. The reason for this is that with a chapter 7 filing, you are discharging all of your qualifying debt due to a lack of money. With a chapter 13 filing, you are required to pay down some of your debt, instead of discharging everything. The courts will order a debt repayment schedule. The courts give you five years to pay down the debt before the rest is discharged.
If you are considering filing for bankruptcy, it is strongly recommended that you reach out to a bankruptcy service or a bankruptcy attorney. Both a bankruptcy service and an attorney can help you determine if filing for bankruptcy is the best course of action for you, and which type of bankruptcy filing you may qualify for. Reach out to bankruptcy services or a bankruptcy attorney today to learn more about filing for bankruptcy.
Share