Facing financial difficulties can be a daunting experience, and sometimes, filing for bankruptcy may be the best way to regain financial stability. Individuals generally have two different options available to them: Chapter 7 and Chapter 13. Each type serves different financial situations and has its own set of benefits and limitations.
Is Chapter 7 bankruptcy right for you?
Chapter 7 bankruptcy or “liquidation bankruptcy” is designed to help you eliminate many unsecured debts, including credit card debts, medical bills and personal loans. This relatively quick process usually lasts between 3 to 6 months. This process might be right for you if:
- You have limited income and pass the means test.
- You generally have debts that are not backed by collateral.
- You want a fresh start relatively quickly and are willing to give up some of your assets to achieve that.
If you believe that this type of filing is right for you, a Bossier City Chapter 7 Bankruptcy lawyer can guide you through the process. This usually involves selling your non-exempt assets by a trustee to pay off creditors.
Is Chapter 13 bankruptcy right for you?
Unlike Chapter 7, Chapter 13 bankruptcy allows you to keep your assets. Instead, this process reorganizes your debts into a repayment plan. This type of bankruptcy might be a good choice for you if:
- You do not pass the means test.
- You have a regular income and can commit to a repayment plan.
- You have significant equity in your home or other valuable assets to protect.
- You have debts that you cannot discharge under Chapter 7 bankruptcy like tax obligations or student loans.
Consulting with a Louisiana Chapter 13 bankruptcy lawyer can provide you with insights into how to structure your repayment plan, which typically spans 3 to 5 years.
Bankruptcy is a significant financial decision with long-term consequences. Each financial situation is unique, and you should consider your options carefully to make the best choice for your future.