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Choosing Chapter 13 Over Chapter 7 Bankruptcy

When Chapter 13 Bankruptcy May Make the Most Sense to You

Chapter 13 versus Chapter 7 – which is best? Answering this question will depend on what your situation is and what your financial goals are.

Chapter 7 bankruptcy and Chapter 13 bankruptcy each have specific objectives to help debtors. You must figure out what your purpose is when you file bankruptcy and how you will use the advantages of each. Also keep in mind that there are some initial eligibility questions that have to be answered.

The following page details when Chapter 13 bankruptcy is something that make more sense to your needs. For further assistance, fill our free bankruptcy case evaluation form or call 1 (888) 632-0504. Once we hear from you, we will connect you with a local bankruptcy lawyer as soon as possible.

When You May Choose Chapter 13 over Chapter7 Bankruptcy

There are a few reasons why you would file Chapter 13 bankruptcy rather than Chapter 7 bankruptcy:

  • You are facing foreclosure or vehicle repossession and want to keep your property.
  • You really want to pay your bills and just need a little more time to do so.
  • You do not quality for Chapter 7 bankruptcy.

The Chapter 7 Means Test in Consideration of Filing Chapter 13 Bankruptcy

One of the ways the court will determine if you are eligible for filing a Chapter 7 petition is to apply the means test. The means test has two parts:

1. A Comparison of Your Income to the Median Income in Your State. If your income is at or below the median income in your area, you qualify for Chapter 7 bankruptcy. However, if your income exceeds the median in your area, move on to the next stage of the means test.

2. A Calculation of Your Disposable Income & Unsecured Debts. In part two of the test, the court will take a look at your income over the next five years. If your income falls within the $6,000.00 - $10,000.00 range, more number crunching is required. Your disposable income over a five year period will be compared to a certain percentage of your unsecured debt. If your disposable income is:

  • Less than 25% of your unsecured debts, you are eligible to file for Chapter 7.
  • Greater than 25% of your unsecured debts, you may not be permitted to file for Chapter 7. Then that leaves Chapter 13 bankruptcy as an option

If you do not qualify for Chapter 7, a Chapter 13 filing may be your best choice. Although it does not offer the immediate clean slate of a Chapter 7 filing, Chapter 13 bankruptcy gives you the peace of mind that you can keep your property and take care of your financial obligations at the same time.

Let Chapter13.Me Connect You with a Bankruptcy Attorney Nearby

Do you need help finding a local bankruptcy attorney who can help you examine whether Chapter 13 or Chapter 7 bankruptcy makes more sense to your current financial situation? No problem.

Just complete our free bankruptcy case evaluation form or call 1 (888) 632-0504, and we’ll be happy to connect you with a local bankruptcy lawyer from our nationwide network of sponsoring bankruptcy attorneys.