You might assume that Chapter 7 bankruptcy is better than Chapter 13 because it allows you to eliminate debt without having to pay anything back directly. You have debts completely discharged and may only have to give up a few assets.
Chapter 13 can be better than Chapter 7, though. Even though it requires you to pay back a portion of what you owe each month for three to five years, it also allows you to keep your assets and minimize how much you have to give up. Additionally, like with Chapter 7, remaining qualified debts are discharged after bankruptcy.
Is Chapter 13 bankruptcy better than Chapter 7?
Sometimes. Depending on your specific financial situation, a Chapter 13 bankruptcy may be better than Chapter 7. For example, if you’re still earning high wages but are in significant debt, Chapter 13 bankruptcy will help you consolidate those debts and protect you against wage garnishment.
On the other hand, if you are not working or are below the poverty line, it makes more sense to go with a Chapter 7 bankruptcy. Why? You may have enough exemptions to exclude all or most of your assets from liquidation and will see your debts cleared faster than you would with a Chapter 13 bankruptcy.
In both cases, the two kinds of bankruptcies will help you get relief from your debt collectors. You can have the repetitive calls and letters stopped immediately. Additionally, you will be able to stop lawsuits that may otherwise affect you or your property.
Which type of bankruptcy is fastest?
Chapter 7 bankruptcy is faster than Chapter 13. Chapter 7 bankruptcy usually takes around 90 to 100 days, while Chapter 13 bankruptcy takes three to five years.
Keep in mind that you may not get a choice when looking at the two types of bankruptcy. If you have a significant income to make payments, the court may require you to use a Chapter 13 bankruptcy rather than Chapter 7. Your attorney can talk to you more about what to expect if you want to seek bankruptcy and aren’t sure which one you will qualify for.