Are you one of the many Tennessee residents who is struggling to make it in this economic climate? Money struggles affect most people at some point in their lives. Sometimes, bankruptcy is the best way to resolve debt issues. Which type of bankruptcy do you need, though -- Chapter 13 or Chapter 7?
These two types of personal bankruptcy work to resolve financial issues in different ways. With a Chapter 13 filing, petitioners ask the court to approve a debt repayment schedule that works with their current budgetary restraints. With a Chapter 7 filing, petitioners ask the court to discharge their debts.
More about Chapter 13
Chapter 13 bankruptcy is meant for people with a high enough income to pay creditors; they just need a little help. There are a number of benefits to filing for this type of debt relief. Some of the most notable benefits are:
- Stop foreclosure
- Stop wage garnishment
- Ability to keep property
- Co-signer protections
- Discharge of certain debts
- Ability to file more than once
Any debts remaining at the end of the bankruptcy term may qualify for discharge -- outside of child support, spousal support and student loans.
More about Chapter 7
Chapter 7 bankruptcy is for individuals who honestly lack the income to pay back creditors. To figure out if you meet the income restrictions required to file for this type of debt, you need to take a means test. It is a simple form on which you compare your income to the state's median income level. If yours is lower or your disposable income is insufficient, you may pursue a Chapter 7 filing. The benefits of this type of filing include:
- Instant debt relief
- Ability to keep some property
- End creditor harassment
Just like Chapter 13 bankruptcy, one cannot discharge student loans and family support debts. Unlike Chapter 13 bankruptcy, with a Chapter 7, you cannot re-file if you fall into money problems again, and any co-signers you have are not protected from creditor claims.
Still not sure which is right for you?
There are advantages and disadvantages to both Chapter 13 and 7 bankruptcies. If you are not sure if either of these debt relief options is right for you, it is okay to get more information about them and other options that may be open to you.