Chapter 7 or Chapter 13 Bankruptcy?

A lot of people wrongly assume that Chapter 7 bankruptcy is somehow inherently better than Chapter 13. After all, Chapter 7 has the advantage of clearing out your unsecured debt very quickly. Chapter 13 takes longer and reorganizes your debts rather than clearing them out entirely.

With that in mind, sometimes clients will come to our office expecting to qualify for a Chapter 7. Then we talk, and after our conversation it’s clear their priorities and financial obligations would make Chapter 13 a better choice.

It’s true Chapter 7 has a lot of advantages. But there are plenty of situations when you probably don’t want a Chapter 7, or when you might actually prefer a Chapter 13.

When You Might Want a Chapter 13 Bankruptcy Instead of a Chapter 7

For example, let’s say you’re behind on your house payments. Under a Chapter 13, you stay in your home and stop the foreclosure. And if you’re behind on your car payment and it’s about to be repossessed, Chapter 13 will allow you to keep your car.

Your income and expense situation might also factor into your decision. Under the 2005 bankruptcy laws, if you’re what’s called an “above-median debtor” (if you make more than the average income in your geographic area), you may have to meet special qualifying rules to file a Chapter 7 instead of a Chapter 13 bankruptcy.

Those are all factors for why you might need and want a Chapter 13.

So both options are powerful, useful mechanisms for getting a fresh start. Your priorities moving forward and your particular financial situation will help clarify which one is right for you.

Memphis Chapter 7 or Chapter 13 Bankruptcy Attorney

If you have questions about what kind of bankruptcy might help you the most, you should talk with a qualified bankruptcy attorney.