SHOULD YOU FILE CHAPTER 7 OR CHAPTER 13?

A Chapter 7 bankruptcy can wipe out certain debts within several months, but a court-appointed trustee can sell your nonexempt property to pay your creditors. You also must meet the “Means Test” requirements to file a Chapter 7.

A Chapter 13 bankruptcy allows you to keep your possessions, restructure some debt, and get you on a more affordable repayment plan with your creditors. You will also be able to catch up on arrears on secured debt, like a vehicle and/or mortgage. You will need to have enough disposable income to afford the payments and be below the maximum total debt limits (currently $2,750,000 combined, secured and unsecured debt.)

Upon court approval of your Chapter 13 Plan, the Trustee will collect your payments and disburse them to your creditors for the life of your plan, usually between three to five years. Once you complete your plan payments, the remainder of the unsecured debt is discharged.

Regardless of which Chapter you choose to file, you must complete a credit counseling course from an approved credit counseling agency within 180 days before filing.