When you are getting ready to file for bankruptcy, you may be wondering about which type of bankruptcy it is right to file for. If you have no experience with bankruptcy, it can be easy to think that you simply read about which one sounds best or appears to suit you better and you file for that one. However, you want to ensure you have done all of your research and spoken with a lawyer who can help you determine which one is best suited for your lifestyle so that you are making wise financial decisions and moving on the best path forward.
What are the pros of Chapter 7 bankruptcy?
Chapter 7 bankruptcy can actually feel like a scarier bankruptcy for many people because it is known as “liquidation” bankruptcy. This means that many of your assets will be sold off in order to pay for your debts. A lawyer, like a Peoria, IL bankruptcy lawyer from a law firm like Pioletti Pioletti & Nichols knows that this can be a very effective type of bankruptcy. It can:
- Avoid a payment plan. You may not have the means for a payment plan of any kind when it comes to your financial state. When this is the case, Chapter 7 avoids a payment plan altogether.
- Be fairly quick. Instead of working to pay off certain debts over the course of 3-5 years, you will likely have your Chapter 7 bankruptcy complete over the course of six months.
- Help keep certain property. While it is true that you would need to liquidate assets, your lawyer can work to help you keep some of the more important ones. You may be able to keep your car or your home if you are current on the payments and are able to continue making payments on them.
- Wipe out a majority of your debts. Once your bankruptcy plan is completed, Chapter 7 bankruptcy can wipe out many of your debts, save for things like child support or student loans.
What are the pros of Chapter 13 bankruptcy?
There are certain benefits to filing for Chapter 13 bankruptcy that Chapter 7 does not offer.
- Creditors can make a payment plan. For some debts, Chapter 13 can force creditors into creating a payment plan.
- You can keep assets like your car or your home. If you are behind on these payments, then filing for Chapter 13 can allow you to make up missed payments on these items in order to keep them. This can help you bring the loan up to date.
- You can save other property. Unlike Chapter 7, you are not risking losing other property. It can be a huge relief to many people to find out that they will have 3-5 years to work on paying and getting loans up to date while knowing they do not have to liquidate their assets. For many, this can also save them some embarrassment if they are having those feelings.
If you are interested in learning about which bankruptcy is right for you, reach out to a trusted lawyer today.