Chapter13.me
(888) 632-0504

Search the site

Your Chapter 13 Bankruptcy Alternatives: Chapter 7 Bankruptcy

Filing Bankruptcy Under Chapter 7... What You Need to Know

When deciding whether Chapter 7 or Chapter 13 bankruptcy is better for your current financial situation, it is wise to take a look at what each consumer bankruptcy protection does.

While Chapter 13 bankruptcy offers the promise of a repayment plan in which you will be able to keep your home and car as long as you gradually catch up on your secured debts, Chapter 7 bankruptcy offers the intrigue of having certain debts – like your credit cards, medical bills, & payday loans – completely discharged, or excused.

;For further assistance, just fill out our free bankruptcy case evaluation form or call 1 (888) 632-0504. Once we receive your information, we will connect you with a local bankruptcy attorney as soon as possible from our nationwide network of sponsoring bankruptcy attorneys.

Comparing Chapter 7 vs. Chapter 13 bankruptcy and assessing which one is right for you can be a bit confusing. That’s why Chapter13.Me gives you key information about both of these consumer bankruptcy protections in order to help you make an informed decision about your financial future. And since the rules for obtaining a Chapter 7 fresh start have changed, it is imperative that you arm yourself with accurate and correct information to plot your own financial course.

Is Chapter 7 Liquidation An Option for You?

First of all, let’s define the term “liquidation.” In legal terms, liquidation is a process used in a Chapter 7 bankruptcy to discharge, or excuse, all unsecured debts.  The trustee may sell your non-exempt assets to pay your creditors. The good news is that since most Chapter 7 debtors don’t have non-exempt assets, there can be no liquidation. However, you still need to keep in mind that even in a Chapter 7 bankruptcy case, there are still certain non-dischargeable debts.

How Do You Qualify for Chapter 7 Bankruptcy?

New bankruptcy law that went into effect in 2005 requires that you take part in a Chapter 7 means test to determine your eligibility for a Chapter 7 filing. The test may take into account the following:

  • A comparison of your income with the median income in your state; and
  • A calculation of your disposable income and unsecured debts.

With the first part of the test, if your income is at or below the median income in your state, you can file for Chapter 7 bankruptcy. If your income is higher than the average median income in your state, then it is time to move to part two of the test. In the second part of the test, the number crunching will focus on your disposable income and unsecured debts.

In the second stage of the Chapter 7 means test, the math breaks down like this:

  • if your disposable income over the next five years is less than $6,000.00($100.00/month), you qualify for a Chapter 7 filing.
  • if your disposable income during that five years is greater than $6,000.00, but less than $10,000.00, you may still be eligible to file under Chapter 7. This will depend on your allowable expenses, which can be better explained by a local Chapter 7 bankruptcy lawyer.

Is Chapter 7 Bankruptcy Right for You?

Chapter 7 may be right for you if you:

  • have no income or low income;
  • have little or no money left after paying your living expenses each month;
  • rent or have little equity in your home; and/or
  • have a few assets (or no assets) outside of your furniture, clothing and other necessities.

Review Chapter 7 Bankruptcy vs. Chapter 13 Bankruptcy with a Local Bankruptcy Attorney

It may be helpful to discuss your eligibility to file Chapter 7 with a local bankruptcy attorney in your area.  We can connect you with a local attorney to assist you in reviewing the options you may have under Chapter 7 and Chapter 13 bankruptcy.  Just complete our free bankruptcy case evaluation form or call 1 (888) 632-0504, and we’ll do the rest in connecting you with a nearby bankruptcy lawyer who can evaluate your current financial situation and examine what these consumer bankruptcy protections may mean to you.