What’s the Difference Between Chapter 7 and Chapter 13 Bankruptcy?

Deciding whether to file bankruptcy or not can be a big decision. You have to take a look at all of your debt and figure out if it’s something you can tackle. If it does seem like an overwhelming amount that you would carry through the rest of your life, bankruptcy may be a good idea. There’s no shame in filing bankruptcy; people do it all the time.


Whether you just went through an expensive divorce or suffered from a severe medical condition, debt happens. The first step towards figuring out if bankruptcy is right for you is by contacting an attorney. A bankruptcy attorney that has expertise in bankruptcy law like Mufson Law in Delray Beach can point you in the right direction. 


The next step is deciding whether you are filing a Chapter 7 or Chapter 13 bankruptcy, keep reading to learn more about their differences.


What is Chapter 7 Bankruptcy?

Chapter 7 is a type of bankruptcy that is filed by individuals and small business owners. The main reason for Chapter 7 bankruptcy is to get rid of credit card debt, medical debt, and other unsecured forms of debt. This type of bankruptcy allows the person filing to hold onto many of their necessary assets. Some people get anxious about losing their property or cars amid bankruptcy. However, with Chapter 7, you can hold onto the things that matter most. This type of bankruptcy can get filed every eight years; although, no one wants to go through this more than once.


What is Chapter 13 Bankruptcy?

Chapter 13 bankruptcy; gets filed for the same reasons as Chapter 7. The main difference is that with Chapter 13, you pay some of your debt back. In Chapter 7, you do not have this responsibility. The payback process usually goes on for about 3-5 years and is not a set amount. When you file under Chapter 13, you will undergo an analysis to determine how much you can pay back every month. Some of the things looked at will be your income and monthly expenses, such as bills. In Chapter 7 bankruptcy, you get to hold onto your necessary assets, such as a house and a car, but in Chapter 13, you are restricted to what you can keep. For instance, any jewelry with high value isn’t exactly a necessity. You may have to sell this to pay back some of your debts. But when you decide to make these monthly payments instead, you can hold onto these nonexempt assets.


What are the Benefits of Filing Either Form of Bankruptcy?

The term bankruptcy seems to carry a stigma with it. However, many people file for bankruptcy, from young and old to low income and high income. Life is always throwing curveballs, and sometimes people end up needing some extra help. The main benefit of bankruptcy is relieving debt. Debt racks up over time and charges you interest. What might have been 10k owed could quickly turn into 20k over time, making it effortless to drown in debt. 


When you file for either form of bankruptcy, you are allowing yourself to press reset. Debt only brings your credit score down, making life a little bit harder. While bankruptcy may scare you from a credit score aspect, what debt is doing is way worse. Another benefit is relief from debt collectors. If you owe money, you are going to get hounded with calls. These people are ruthless and call multiple times and from different phone numbers. The only way to shake them is to pay up or file for bankruptcy. Either way, the relief from harassment is an underrated benefit.


Contact Mufson Law Today!

Are you unsure if filing for bankruptcy is right for you? Not knowing whether or not you should or need to is completely normal. Most people choose to tackle their debt for some time before realizing that it’s adding up faster than it’s going down. Whatever you decide to do, it’s never a bad idea to get a professional’s opinion. With the help of a bankruptcy attorney, you can have some insight into bankruptcy law in Delray Beach. This information will allow you to make the best decision for your situation. To get your free consultation, reach out to the Mufson Law team at (561) 272-1003.