Can help you resolve your debts while retaining certain assets or getting caught up on secured debts, like an auto loan or mortgage. Though rare, the trustee can sell nonexempt property. Generally for unsecured debt; does not protect from foreclosure or repossession. The length and cost of the repayment plan is challenging for many filers.
Which form of bankruptcy is best for you depends on your financial situation and goals. To determine whether Chapter 7 or Chapter 13 bankruptcy is best for you, consult with a bankruptcy attorney.
Most consumers opt for Chapter 7 bankruptcy, which is faster and cheaper than Chapter The vast majority of filers qualify for Chapter 7 after taking the means test , which analyzes income, expenses and family size to determine eligibility.
Chapter 7 bankruptcy discharges, or erases, eligible debts such as credit card bills, medical debt and personal loans. In some instances, a bankruptcy trustee — an administrator who works with the bankruptcy courts to represent the debtor's estate — may sell nonexempt items, meaning belongings that are not protected during bankruptcy.
Nonexempt items vary according to state law. And some who qualify for Chapter 7 may still choose to file for Chapter 13 because they want to retain certain assets or get caught up on their mortgage payments.
However, Chapter 13 repayment plans are challenging: All disposable income after certain allowances has to be directed toward repaying debt over three to five years. Which is better: Chapter 7 or Chapter 13? See the full picture of your debt. Track your loans, card balances, and more — all together on one screen. On a similar note When possible, Chapter 7 is a much better solution — even if it requires getting rid of expensive assets. We may love our home, our apartment, or or vehicle.
But we still may be financially better off getting rid of them to eliminate the debt attached to them and other unsecured debt like credit cards and medical debts. Attorney Jonathan Petts. Jonathan Petts has over 10 years of experience in bankruptcy and is co-founder and Board Chair of Upsolve. John's University, clerked for two federal bankruptcy judges, and worked at two top New York City law firms specializing in Take our screener or read our bankruptcy F.
Upsolve is a c 3 nonprofit that started in Our mission is to help low-income families who cannot afford lawyers file bankruptcy for free, using an online web app. Spun out of Harvard Law School, our team includes lawyers, engineers, and judges.
We have world-class funders that include the U. To learn more, read why we started Upsolve in , our reviews from past users, and our press coverage from places like the New York Times and Wall Street Journal. We are funded by Harvard University, will never ask you for a credit card, and you can stop at any time. Free Articles. Bankruptcy Tool. Filing Guide. In a Nutshell An unsuccessful Chapter 13 can leave you in worse financial shape. Join Expert Community.
Written By:. Continue reading and learning! Should I File Chapter 7 Bankruptcy? By the Upsolve Team. Chapter 7 vs. Chapter 13 Bankruptcy By the Upsolve Team. Bankruptcy Learning Center Research and understand your options with our articles and guides. You have money questions. Bankrate has answers.
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While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. If you are feeling overwhelmed by your debt, you might be looking for a way out of your predicament. Most people tend to get into this sort of situation when life throws curveballs at them. For instance, you could lose your job, have a major accident or lose control of your financial situation in some other way. Filing for bankruptcy would offer you a way out of your predicament in a manner that also offers you legal protection from your creditors.
Filing for a chapter 13 bankruptcy allows you to come up with a plan with the approval of your creditors and the legal system to pay off your debt with your earnings over a number of years. This is different from a chapter 7 bankruptcy, which taps into your assets to pay off your creditors.
It could happen that after your chapter 13 bankruptcy plan is approved and you are making inroads into your debt, you might want to get out of chapter 13 earlier than agreed upon. The government also regularly adjusts those limits for inflation.
You should also have filed your tax returns for the previous four years. And you would have to attend credit counseling before filing for the bankruptcy.
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