For those who have become overwhelmed with personal debt, bankruptcy can be the relief they need to get a fresh start. Some may wonder, however, whether Chapter 7 or Chapter 13 is for them. What are the differences and how should one choose? Florida residents who are considering bankruptcy may want to understand the differences.
Chapter 7 bankruptcy is considered to be the faster and easiest way to file. Those who have unsecured debts such as credit cards, personal loans, and medical bills can have those bills discharged through Chapter 7. With this type of bankruptcy, however, the client may have to give up a few assets, such as jewelry or expensive vehicles, but this is not always the case.
When one files a Chapter 13 bankruptcy, a plan is made to repay some or all of his or her debt. The client must be able to show that they have enough income to make the proposed payments in order to repay the debts within 3 to 5 years. The debt must also be below a certain amount in order to qualify.
The choice whether to file Chapter 7 or Chapter 13 is usually determined by a number of things. Whether or not the client is eligible for each type of bankruptcy is one of these. The priorities of the client and the value of his or her assets is also a determining factor in choosing which type of bankruptcy to file. Florida and all other states have various exemptions that are allowed in the bankruptcy case. Anyone who is considering bankruptcy may choose to speak with an experienced bankruptcy lawyer to discover which type is best for him or her.
Source: nerdwallet.com, “Bankruptcy Basics: How to File for Chapter 7 or Chapter 13“, Sean Pyles, Accessed on May 23, 2017