Having too much debt may haunt you day and night, and you may be looking for ways to get your finances back under control. You may be able to give yourself a fresh start by filing for either Chapter 7 or Chapter 13 bankruptcy.
How do the two types of personal bankruptcies differ, and how do you know whether one format might better meet your needs?
The Chapter 7 bankruptcy
A Chapter 7 bankruptcy may be an option for you if your income is low enough to qualify. You must take a means test before moving forward with a Chapter 7 case, which is also considered a liquidation bankruptcy. With a Chapter 7 case, you may have to turn over your home, vehicles and other assets to pay back some of your debts. However, this is not definite and depends on the situation. Often, Chapter 7 cases take between about three and five months in total.
The Chapter 13 bankruptcy
If you are unable to qualify for Chapter 7 or prefer a format that offers more protection for your personal assets, a Chapter 13 filing may be appropriate. This type of bankruptcy requires that you reorganize your debts and come up with a realistic amount to pay back over time. Most Chapter 13 bankruptcies take between about three and five years to complete.
Keep in mind that you have to complete credit counseling within a specific amount of time before moving forward with either a Chapter 7 or a Chapter 13 bankruptcy case.