Filing for bankruptcy can be a daunting task, but it can also provide a fresh start for those struggling with debt. However, understanding the differences between Chapter 7 and Chapter 13 bankruptcy is crucial in determining which option is best for your specific situation. Here are some key factors to consider when deciding between Chapter 7 vs Chapter 13:
The Difference Between Chapter 7 and Chapter 13 Bankruptcy
1. Eligibility: Chapter 7 bankruptcy has stricter eligibility requirements, with a means test to determine if you have enough income to repay your debts. On the other hand, Chapter 13 bankruptcy is available to those with regular income, regardless of the amount.
2. Asset protection: In a Chapter 7 bankruptcy, non-exempt assets may be sold to repay creditors. In contrast, Chapter 13 allows debtors to keep their assets and pay off their debts through a repayment plan.
3. Debt discharge: Chapter 7 bankruptcy offers a complete discharge of most unsecured debts, while Chapter 13 allows for a partial discharge after completing the repayment plan.
4. Repayment plan: Chapter 13 requires debtors to enter into a repayment plan lasting 3-5 years, while Chapter 7 does not require a repayment plan.
5. Impact on credit: Both Chapter 7 and Chapter 13 bankruptcy will negatively impact your credit score, but Chapter 13 may be viewed more favorably by lenders as it shows an effort to repay debts.
Ultimately, the decision between Chapter 7 vs Chapter 13 bankruptcy should be based on your individual financial circumstances and goals. It is important to seek the advice of an experienced bankruptcy attorney to guide you through the process and help determine which option is best for you.
Contact Our Detroit Chapter 7 & Chapter 13 Bankruptcy Lawyers
At Law Offices of Marshall D. Schultz, we understand the stress and uncertainty surrounding bankruptcy. Our team of experienced attorneys can provide personalized guidance and support throughout the entire bankruptcy process. Contact us today to schedule a consultation and take the first step towards financial freedom.
No matter your reason, our bankruptcy lawyers in Detroit, MI can help. Call (888) 822-6730 or complete a form for a free consultation.