Which Type of Bankruptcy Is Right for Me?
Choosing which bankruptcy chapter is right for you, is high dependent on your unique circumstances. Your financial situation and goals will determine what type of bankruptcy is right for you. You will also have to fulfill certain eligibility criteria to qualify for a specific bankruptcy chapter.
Navigating the complexities of bankruptcy can be overwhelming, but understanding the different types of bankruptcy is crucial for making informed decisions about your financial future. In this guide, we'll explore the two primary types of bankruptcy for individuals: Chapter 7 and Chapter 13.
For instance, you may file Chapter 7 bankruptcy if your income level is below the legally stipulated threshold. On the other hand, if your income level is significantly higher, you may file for Chapter 13. If you wish to protect your business in bankruptcy, the right choice for you as a corporation, may be Chapter 11 bankruptcy. Let’s explore bankruptcy further in this article and help you answer the question, “What type of bankruptcy is right for me?”
When is Chapter 7 Bankruptcy Better than a Chapter 13?
Once you are clear about what bankruptcy is and how to file for it, you need to determine the type of bankruptcy that works best for you. If you are looking to get rid of most of your debt, you may choose Chapter 7 bankruptcy. In this case, you will also end up losing more of your assets. On the other hand, under Chapter 13 bankruptcy, you will be able to retain more of your assets, but the debt repayment requirements are also higher.
Additionally, if you don’t want to spend too much time on the bankruptcy process, Chapter 7 filing may be better for you because it only requires around four to six months. Conversely, Chapter 13 bankruptcy may continue at a slow pace for as many as three to five years.
Chapter 7 Bankruptcy:
1. Eligibility Criteria: Learn about the qualifying factors for Chapter 7 bankruptcy, including income limits and the means test.
2. Liquidation Process: Understand how Chapter 7 involves the liquidation of non-exempt assets to pay off creditors.
3. Discharge of Debts: Explore the debts that can be discharged through Chapter 7, offering a fresh financial start.
Chapter 13 Bankruptcy:
1. Repayment Plan: Discover how Chapter 13 allows individuals to reorganize their debts through a court-approved repayment plan.
2. Eligibility Requirements: Explore the income and debt limitations associated with Chapter 13 bankruptcy.
3. Protecting Assets: Learn how Chapter 13 may allow you to retain valuable assets while addressing your financial obligations.
Factors Influencing Your Decision:
1. Income and Debt Levels: Evaluate your financial situation to determine eligibility for Chapter 7 or Chapter 13.
2. Asset Protection: Consider whether protecting specific assets is a priority for you.
3. Repayment Preferences: Assess your ability and willingness to adhere to a repayment plan under Chapter 13.
When Is Chapter 13 Bankruptcy Preferred Over Chapter 7?
When you are seeking to protect others in a bankruptcy, you may choose Chapter 13. Under this filing, your co-debtors will have protection against the creditors. Under Chapter 7, your co-debtors continue to be liable for repayment, even when you are no longer responsible.
Also, if you are looking to retain more of your assets, you may choose to file a Chapter 13 bankruptcy. However, under this option, your repayment obligations will be higher. Unlike Chapter 7, where you are not allowed to “make up” for any missed payments, you can catch up retroactively on missed payments under Chapter 13.
Who Uses Chapter 11 Bankruptcy?
Businesses more commonly file for Chapter 11 bankruptcy in Maryland. When a company is inherently sound and profitable, but it comes under severe financial distress, Chapter 11 corporate bankruptcy can allow them time to restructure debt without constant pressure from debt collectors or reeling under the burden of mounting debt and interest.
When the company is unable to move forward and carry on its business effectively due to increasing debt levels and a poor business model, a Chapter 11 bankruptcy will provide the company time to reorganize and reset its financial future for growth. When you consult with a dedicated bankruptcy attorney in California, you can get accurate answers to questions like what is bankruptcy, how do I file for bankruptcy, and which type of bankruptcy is right for me?
Decide which Bankruptcy Chapter with a Maryland Bankruptcy Lawyer
If you are considering bankruptcy, but you are unsure which type is right for you, hire an experienced and skilled bankruptcy lawyer in California. At the Law Offices of Bankruptcy Near Me, LLC, we have approximately a decade of experience with bankruptcy. We are knowledgeable about the laws surrounding bankruptcy, and we can provide you with assistance when it comes to choosing the right type for your situation. Call us today at 301-550-5408 or contact us online for a free consultation regarding your bankruptcy.