Three Reasons to file Chapter 7 Bankruptcy Instead of a Chapter 13 Bankruptcy
Three Reasons to file a Chapter 7 bankruptcy instead of a Chapter 13 Bankruptcy?
One reason to file a Chapter 7 instead of a Chapter 13 is that, on average, the Chapter 7 is opened and closed very quickly.
Many of my clients’ bankruptcies are considered “open” by the Court, anywhere between five to nine months. This is a very short timeframe when compared to the Chapter 13 reorganization, which lasts for a minimum of three years, up to a maximum of five years.
The quicker that the bankruptcy is over the quicker that you can start working to rebuild your credit and move past this chapter of your life.
Another good attribute of the Chapter 7 is that many of my clients lose nothing as a result of filing the bankruptcy.
Chapter 7 is a liquidation bankruptcy, meaning that if an individual owns property or assets that cannot be protected by applicable exemption laws they could be taken away and sold for the benefit of the creditors. While that may worry some reading this, the good news is that somewhere upwards of 95% of all Chapter 7 cases result in the exemption laws protecting everything that the individual owns, leaving nothing the creditors.
So although Chapter 13 allows a filer to protect certain assets they may lose in a Chapter 7, it is usually a moot point because often times, you do not lose any assets whey you file a Chapter 7.
The final positive factor of the Chapter 7 over the Chapter 13 reorganization is simply that the Chapter 7 has no payment plan.
Often times my clients need a clean break from their debts that have weighed them down for years. The Chapter 13 simply extends that time by at least 3 years and sometimes up to five years with a monthly payment to the Court.
The simplicity of the Chapter 7, which has no payment plan, is that you have a fresh start at life starting when the case is filed and the discharge finalized a short time later.
