Benefits from Filing Chapter 7 V.S. Chapter 13

While both Chapter 7 Bankruptcy and Chapter 13 Bankruptcy offer benefits to the individual consumer, each type of bankruptcy provides the individual consumer with differing types of benefits and opportunities. The benefits of filing a Chapter 7 Bankruptcy verses a Chapter 13 Bankruptcy are not mutually exclusive. In other words, while some of the benefits are different, they both provide the consumer with the opportunity for a fresh start and new lease on life. Choosing between which type of bankruptcy best suits your situation will depend on your long term and short term goals. Of course, discussing your goals with a competent and experienced bankruptcy attorney, like here at Legal Helpers, would be a very good first step!

The primary benefit of a Chapter 7 Bankruptcy is the elimination of most or all of your unsecured debt. Unsecured debt is debt that does not have collateral, or property attached to it. An unsecured debt is debt for which a creditor cannot repossess, or take back, a particular piece of property for failure pay on that debt. The most common examples of unsecured debt are credit cards, medical bills, payday loans, utility bills and personal signature loans. All of those types of debt can be are eliminated in Chapter 7 Bankruptcy. Upon successfully completing a Chapter 7 Bankruptcy you will not owe your creditors anything for most types of unsecured debts. By contrast, in a Chapter 13 Bankruptcy, you must pay back your debt based on what you can afford. Certainly you do not have to pay back everything you owe in chapter 13, but you will have to pay something. While there are some types of debt that cannot be eliminated in any bankruptcy, the principle benefit of a Chapter 7 Bankruptcy is the elimination of most type of unsecured debt without payments to anyone.

Another benefit of Chapter 7 Bankruptcy is that you can obtain relief from your debts in a shorter period of time. The typical Chapter 7 Bankruptcy case is discharged three to four months from the date you file your Chapter 7 Bankruptcy case with the court. Discharge means that you officially do not owe creditors anymore. A Chapter 7 Bankruptcy can help you become debt free in only three to four months!

While a Chapter 13 Bankruptcy can also help eliminate some of your unsecured debt, the principle benefit of Chapter 13 Bankruptcy is the ability to help you with secured debt. The filing can stop a home foreclosure or the repossession of other types of secured collateral, like a car. A Chapter 13 Bankruptcy is a repayment plan through bankruptcy court. Typically, a repayment plan lasts 36 to 60 months and provides for paying back your secured creditors the outstanding delinquency at time you file your Chapter 13 Bankruptcy. If you successfully complete a Chapter 13 Bankruptcy repayment plan, you will emerge debt free and current on your house and car!

The other main benefit of a Chapter 13 Bankruptcy is the 100% protection of your valuable assets from seizure by your creditors. Although Chapter 7 Bankruptcy provides for some protection of your assets through state created “exemptions,” not all of your property may be completely shielded from seizure. If you own a home or car that that is paid in full or has significant equity, a Chapter 13 Bankruptcy will allow you to reap the benefits of a bankruptcy stay and discharge, the elimination of at some or most of your debt, and allow you to keep your hard earned assets!

While the end results of Chapter 7 Bankruptcy and Chapter 13 Bankruptcy are similar, some the benefits from each type of Bankruptcy can be very different. In order to determine which type of Bankruptcy you should file or which type of bankruptcy best suits your needs and long term goals you need to seek advice from a Legal Helpers attorney immediately.

Credit card debt in relation to Chapter 7