Which bankruptcy option is better for me, Chapter 13 or Chapter 7?

Chapter 7 vs Chapter 13

Which Option is Better for You?

California Chapter 7 vs 13: there are a few basic considerations regarding which bankruptcy option is best for your circumstances. Many California residents suffering under heavy debt burden are simply interested in eliminating that burden and getting a fresh start. For them, Chapter 7 Bankruptcy provides the most attractive choice. However, there are several situations where a Chapter 13 Bankruptcy is preferable and a better choice for the debtor. Those situations mainly arise when there is property involved that the debtor wants to keep at the end of the bankruptcy process. Chapter 7 allows only certain property exemptions under California Bankruptcy law while Chapter 13 provides a payment plan to keep your property that is not covered by the California Bankruptcy Exemptions. The most common example of this is a home. Chapter 13 allows you to make up any delinquent payments over time and reinstates the original mortgage agreement. Additionally, some debtors are not eligible to file Chapter 7 because they have too much income based on the California Bankruptcy Means Test or have certain kinds of debt that are not dischargeable in a Chapter 7 procedure. 

Advantages of California Chapter 7 vs 13

Although some of the advantages between chapter 7 bankruptcy and chapter 13 bankruptcy overlap, there are important unique advantages to both.

California Chapter 7 Bankruptcy

Immediate Protection Against Creditors

Once your bankruptcy is filed you are protected against creditor’s collection efforts and wage garnishment.

A Fresh Start

Once your bankruptcy is completed, the only debts you owe will be for assets you secured by signing a Reaffirmation Agreement.

A Clear Slate

After your filing date, new wages you earn and property you acquire are yours. Your creditors have no claim over them.

A Quick Start to Your Debt Free Life

It usually only takes about 3-6 months for your case to be settled and completely discharged.

California Chapter 13 Bankruptcy

Immediate Protection Against Creditors

Once your bankruptcy is filed you are protected against creditor’s collection efforts and wage garnishment.

Keep Any Exempt and Non-Exempt Property You Want

You can keep all your property that you choose as long as you can afford the payment plan established by the court.

Reduced Debt

Unlike Chapter 7 where debt is discharged, debt can be reduced under a Chapter 13 payment plan.

Home Foreclosure Protection

As long as you continue to meet the terms of your Chapter 13 payment plan, you are protected against foreclosure of your home.

Co-Signer Protection

If your Chapter 13 payment plan provides for full payment of a debt, co-signers on that debt are immune from the creditor’s efforts.

More Time to Pay

You have more time to pay debts that can not be discharged (like taxes or back child support).

Contact a Mission Valley Bankruptcy Attorney

For more information on if and when bankruptcy is right for you and which bankruptcy filing fits your financial situation, please don’t hesitate to call attorney Chris Bush at (619) 678-1134. He is dedicated to helping those suffering under excessive debt and searching for new start.