Over a million non-business bankruptcy filings are made every year in the United States. Unfortunately, this is a sign that a lot of people out there are struggling financially. If you’re someone suffering through a financial hardship, you have a couple of options at your fingertips. Chapter 7 and Chapter 13 make up most of the bankruptcy filings here in the states. The one you choose to use will depend on your assets, income, financial obligations, and so forth. Let’s take a look at each of these to see which one would be best for you.
Most people facing financial hardship will choose chapter 7 bankruptcy. Chapter 7 bankruptcy is meant to deal with those who are overwhelmed with unsecured debt. Unsecured debts are generally debts that don’t require you to provide collateral. In either case, this particular filing will give you an opportunity to sell off a portion of your assets in order to wipe the slate clean. It’s important to note that this particular filing option is only for those with little to no assets or disposable income.
Surprisingly, a lot of people who are looking to file for bankruptcy have quite a bit of disposable income. In this case, these individuals won’t be able to file for chapter 7 bankruptcy. Instead they’ll have to file for Chapter 13 bankruptcy. This filing option isn’t necessarily meant to wipe the slate clean. Because you have disposable income you’ll be given various repayment options. Your creditors will be willing to work with you in order for them to get their money. The good thing about Chapter 13 is that you won’t be forced to sell off any of your property.
It’s important that you understand that bankruptcy isn’t for everyone. Again, not all debt can be wiped away with this financial move. In most cases, only unsecured debt will go away; things like mortgages and student loans will not be erased. If you’re someone with unsecured debt, and you have little to no income, then Chapter 7 bankruptcy is the way to go. On the other hand, if you make too much money, you’re only other viable option is Chapter 13 bankruptcy. If you can’t decide, consider consulting with a bankruptcy attorney.
