Deciding to apply for bankruptcy is a big decision. While it can have many positive results for you and your future, it is not the only decision you need to make. If you are looking to gain financial freedom from considerable debt, you will also need to decide which form of bankruptcy you want to pursue.
More than 700,000 people decide which form of bankruptcy is right for them every year. Before you make your decision, you should have some knowledge of what you are choosing between. Here is a brief summary of the differences between Chapter 7 and Chapter 13 bankruptcy:
The properties of Chapter 7 bankruptcy
When you ask someone what they think happens in a bankruptcy, they will most likely describe something that is similar to a chapter 7 bankruptcy. Most people believe that you lose everything in bankruptcy, but this is not the case. In Chapter 7 bankruptcy, an applicant only needs to sell their non-essential assets. These assets include secondary properties like a car or home, heirlooms, and expensive assets like a boat or ATV. The applicant applies the funds from this sale to their debt, and bankruptcy discharges the remaining unsecured debt.
How Chapter 13 bankruptcy functions
Chapter 13 bankruptcy is an option that does not require any sale of assets to qualify for discharge. Instead of discharging the unsecured debt upfront, this bankruptcy method places the applicant on a payment plan. This plan lasts between three and five years and allows the applicant to make a single monthly payment toward their debt. After the plan ends and the applicant makes all of their payments on time, the plan will discharge any remaining debt.
You do not have to make this choice alone
If you are thinking about bankruptcy and which form of it is best for you and your unique needs, contact a bankruptcy attorney. They can offer you guidance and experience to help you decide which option is right for you and help you complete your application process.