Which is Right for Me - Chapter 7 or Chapter 13?
People often assume that Chapter 7 bankruptcy is the way to go if they can qualify, but Chapter 13 is often the best alternative for people who might otherwise be required to turn assets over to a Chapter 7 trustee. At Affordable Bankruptcy in St. Louis, our attorneys have the detailed understanding of both chapters of the Bankruptcy Code that can help ensure that your decision will be the right one for you.
Call 866-793-6347 for sound advice about bankruptcy in eastern Missouri
There are three main differences between a Chapter 7 liquidation and a Chapter 13 repayment (or "wage earner's") plan:
- Eligibility: To file for Chapter 7 you may not be eligible if your gross income exceeds the state median, but there is a two-step process where you may pass the means test based upon your other expenses. We will take the time to review your expenses to see if you qualify for Chapter 7.
- Discharge: The Chapter 7 discharge is the most complete relief available under the Bankruptcy Code. Basically, you walk away from your unsecured debts and you may choose to walk from secured debt such as houses and cars (if you choose to give them up). There are many exceptions to discharge that may or may not apply to your situation. In Chapter 13, you may have to pay back a portion of your unsecured debts over a period of three to five years. Then you're discharged from the remainder.
- Control: In a Chapter 7 case, a trustee is appointed to take control of your assets. In practical terms, this means looking over your asset list to see if there's anything of value that is not exempt from the claims of your creditors. In most cases, that value will be zero, or pretty close to it. In some cases, however, you'll need to turn valuable property to the trustee or pay the equivalent to the trustee. That money is then divided among all creditors who file a claim. In Chapter 13, there's no turnover, but you'll need to pay the value of your nonexempt assets to unsecured creditors over three to five years.
Generally speaking, the more valuable your nonexempt assets are, the more likely that Chapter 13 will be right for you. This can be especially important if you need to file for bankruptcy shortly before or after receiving a substantial tax return.
Missouri bankruptcy lawyers Angel Foley and Doug Walker look beneath the surface of your financial situation and debt pressures to make sure that you're getting the greatest benefit possible from your case. Factors such as the nature of your debts, the amount of equity in your home, or whether you've filed for bankruptcy before can all affect the choice between Chapter 7 and Chapter 13.
Whether you're facing garnishment on medical debts or the imminent foreclosure of your home mortgage, bankruptcy can help you relieve the pressure. Choosing the right form of bankruptcy, however, will help ensure that you get the most benefit possible out of your case. For additional information about our ability to guide you through the choice between Chapter 7 and Chapter 13, contact Affordable Bankruptcy for a free consultation in St. Louis.