Chapter 7 Vs Chapter 13: Which is Better if you Own Assets?
Filing for bankruptcy is a fast and effective way of finding debt relief. People who follow this path have two options over the type of bankruptcy they can file: Chapter 7 or Chapter 13. This is an important decision that often comes down to two things: one’s financial goals and assets. Our bankruptcy attorney in Breckenridge Hills Mo, Charles H. Huber often recommends Chapter 7 as the first option. However, it’s worth noting that this type of bankruptcy sometimes won’t necessarily fit your needs. Below, we break down the two options to help you figure out which will likely suit you if you have assets.
Chapter 7 Vs Chapter 13: What is the difference?
The difference between Chapter 7 and Chapter 13 can be broken down into three main factors: eligibility requirements, time frame, and debt resolution method. Most people will opt for Chapter 7, primarily because it’s much faster and cheaper compared to Chapter 13. Essentially, you can get the entire process behind you in about 4 months. Comparatively, Chapter 13 can drag on for three to five years. However, the problem with Chapter 7 is that it’s a liquidation of assets type of bankruptcy. So, for those with assets, this might prove problematic as you will have to face concerns over whether you will be able to keep your house, car, or any other assets you might have.
The simple answer to these concerns is that it depends on how much equity is in those items or property. By equity, we mean the value attributable to an asset. In short, how much would you realize from selling the assets after satisfying any debts that might be owed on those assets? Bankruptcy state laws differ, but you might be able to protect a certain amount of equity on a property via bankruptcy exemptions. There’s one catch though. You must ensure that you claim an appropriate bankruptcy exemption when filing your bankruptcy petition. Otherwise, the asset won’t be protected against the Chapter 7 bankruptcy trustee. Those with a lot of non-exempt assets may benefit more from Chapter 13 bankruptcy since in this case you pay to keep it via an agreed repayment plan.
Bankruptcy Attorney In Breckenridge Hills Mo
In a nutshell, Chapter 7 bankruptcy works well for low-income debtors who have little or no assets. Nevertheless, it can still be a worthwhile endeavor if the amount of debt you would erase exceeds the value of the property you would lose. On the other hand, Chapter 13 bankruptcy is perfect for those who earn a lot of money since they might not be eligible for Chapter 7. It’s also a great way to go if you have a lot of non-exempt assets that you hope to keep. Just remember that you will only receive a discharge once you have completed all plan payments. As we said, the ultimate decision will depend on your needs and financial goals
Still not sure which bankruptcy is right for you? We recommend hiring a bankruptcy attorney to help you navigate the complexities of filing for bankruptcy. For a bankruptcy attorney in Breckenridge Hills, Mo, look no further than Charles H. Huber Law, boasting over 30 years of experience in bankruptcy law. Charles H. Huber’s goal with every client is to find the best solution for their unique circumstances. Get in touch with us today to get started on your journey to financial freedom.