Which Bankruptcy Chapter is Right for You?
As a top bankruptcy attorney Memphis TN has trusted for decades, I’ve seen thousands of people in my office who need to know which chapter of bankruptcy is right for them. Maybe you have the same question. The answer depends on your situation, the types of debts you owe, and what you want your bankruptcy to accomplish.
A bankruptcy “chapter” refers to a section of the bankruptcy law, just like a chapter in a book. Each chapter comes with its advantages and disadvantages. Most individuals filing bankruptcy for their debts (as opposed to a business they own) will choose between Chapter 7 and Chapter 13 bankruptcy.
When You Need Chapter 7 Bankruptcy
Chapter 7 bankruptcy clears you of your debts. It doesn’t require you to set up a payment plan or do anything else to repay what you owe. So Chapter 7 is perfect for people who are in over their head in credit card debt. It also discharges all debt from medical treatments, payday loans, and utility services. These are all that we call “unsecured” debts, which just means they aren’t connected to a particular asset.
Chapter 7 bankruptcy comes with a lot of advantages. It stops wage garnishment, clears your debt, and lets you have a fresh start. But if you want to protect your assets, Chapter 13 bankruptcy might be a better fit.
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When You Need Chapter 13 Bankruptcy
In Chapter 13 bankruptcy, the courts lump together all your debts and set up a payment plan according to your financial situation. They make the plan affordable for you, so you can make the monthly payments without feeling overwhelmed.
Just like Chapter 7, Chapter 13 bankruptcy stops wage garnishment. But it goes a lot further than that: it stops repossession and foreclosure, too. By filing Chapter 13, you can get out of debt and also save your house and car.
How to Decide Which Type of Bankruptcy You Need
A skilled bankruptcy lawyer can help you determine which chapter to file. They will look at your financial situation, whether you qualify for a certain bankruptcy chapter, and what priorities you might have.
Look for an attorney with experience in consumer bankruptcy who offers a free consultation and has excellent reviews.
Thanks to our friends and contributors from Darrell Castle & Associates, PLLC for their insight into bankruptcy law.