Should I File A Chapter 13 Or A Chapter 7?
The decision to file a bankruptcy case is a serious matter. Entering a bankruptcy without much thought can have serious consequences that could make matters worse. You should only file a bankruptcy case after consulting with an experienced Manhattan bankruptcy lawyer. An attorney analyzes your financial situation and offers advice regarding your non-bankruptcy and bankruptcy options.
In addition to discussing the options, an attorney discusses the pros and cons of each debt relief option. It is important to understand the benefits and disadvantages of each option before deciding what is in your best interest.
Why Should I File a Chapter 7 Case?
If you do not have any income left over each month after paying your living expenses to pay bills, you may qualify for a Chapter 7. A Chapter 7 case is known as a liquidation bankruptcy. This chapter of bankruptcy is for individuals who are unable to pay their bills, but they must first meet the income requirements of the Means Test.
One of the main advantages of a Chapter 7 is that you can discharge unsecured debts in full within four to six months, provided you do not have assets that need to be liquidated. You walk away from most, if not all, of your unsecured debt for a clean, fresh start. Your bankruptcy is completed quickly, and you move on with your life. Not all Chapter 7 cases are this smooth.
Some Chapter 7 bankruptcies are what we call “asset cases.” Losing assets is one disadvantage of filing a Chapter 7 bankruptcy case. If you have assets that are non-exempt, the Chapter 7 trustee may sell those assets and uses the funds to pay your creditors. It is important to work with an experienced New York bankruptcy attorney who understands how to use exemptions to give you the most protection in a Chapter 7. Another disadvantage of a Chapter 7 is that you cannot save your home or car if you are behind in payments. The lender expects you to surrender the asset immediately or catch up the payments very quickly.
Why Should I File a Chapter 13 Case?
A Chapter 13 bankruptcy case is also called a “wage earner” bankruptcy because you must have a steady monthly income to fund a bankruptcy plan to be eligible to file under this chapter of bankruptcy. In a Chapter 13, you propose a monthly plan to repay a portion of your debt to your creditors. At the end of the plan, any remaining unsecured debt is discharged giving you a fresh start. A major benefit of Chapter 13 is that you can spread out past due taxes, mortgage payments, car payments, and past due domestic support payments to avoid losing assets or being in contempt of court.
On the other hand, a Chapter 13 case can take up to 60 months to complete, and for the most part you cannot sell assets or incur debt without court permission during the case.
Call for A Free Appointment with A New York Bankruptcy Lawyer
The thought of filing Chapter 13 bankruptcy may be unappealing and frightening, but filing a case could be the best way to get out of debt. However, you must have trusted and competent legal counsel to guide you through the process to ensure that you are doing what is best for you, your family, and your future.
Manhattan bankruptcy attorney William Waldner helps people find a way to resolve their debt problems and move on with their lives. He has helped others, and he can help you.
For a free consultation with Attorney Waldner, call (212) 244-2882 or use the contact form on our website. Our office is in Midtown Manhattan in New York City.