Drowning in debt? If you feel that you can no longer make your payments, you may want to consider filing for bankruptcy. There are different types of bankruptcies you can file, each has its own benefits and drawbacks. Which one should you choose? There are a variety of factors to consider before you make your decision, but the way in which you can make the best choice for yourself is understanding a Chapter 7 vs. Chapter 13 bankruptcy in Watertown.
Before going into depth on the different types of bankruptcies, you need to ask yourself what you want out of this repayment plan. Do you want to prevent your house from foreclosing or is walking debt free more of a priority to you? Do you have stable employment to pay back your debts? A Chapter 7 bankruptcy is chosen by some because of its ability to discharge the debtor’s obligations. This means that a bank trustee will take your property, unless it qualifies as exempt property, and sell the property in order to pay back your creditors. Although you will lose property in filing a Chapter 7 bankruptcy, you won’t have to spend years paying back your debts.
A Chapter 13 bankruptcy is, for the most part, for individuals with a consistent income that want to keep their property. Depending on the results of you taking the bankruptcy means test, the courts may determine for themselves that a Chapter 13 bankruptcy is best for you. The bankruptcy means test is a way in which to determine if you have the capacity to pay off your debts. The idea behind this test is that people should pay back their debts if they could. Of course, some who do qualify for a Chapter 7 bankruptcy choose to file for a Chapter 13 bankruptcy because they would only have a seven-year credit reporting period as opposed to a ten-year credit reporting period that would be required if one filed for a Chapter 7 bankruptcy. Choosing between a Chapter 7 vs. Chapter 13 bankruptcy is never easy – consult an experienced bankruptcy attorney to ensure that you are making the best decision possible.