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Do you qualify for Chapter 7 or Chapter 13 bankruptcy?

On Behalf of | Nov 6, 2018 | Uncategorized

When facing a number of financial struggles, many people in Tennessee want to get out from under their debt as quickly as possible. However, due to negative reputations of many debt relief options, like bankruptcy, you and numerous others may continue to slowly chip away at outstanding balances that only seem to grow.

If you are truly interested in getting back on the right financial track, considering bankruptcy could prove beneficial to you. Even just having the right information could impact your decision. Depending on your specific circumstances, you could qualify for Chapter 7 or Chapter 13 bankruptcy.

Little to no income?

If having little to no monthly income is a major contributor to your debt-related problems, you may find relief through Chapter 7 bankruptcy. This option is designed for individuals who do not have the financial means to pay back their creditors. In fact, to qualify for this avenue, you would need to pass a means tests that shows that inability.

Before jumping in and deciding the Chapter 7 is right for you, you may want to take the following information into account:

  • Chapter 7 can stop creditor actions against you, like wage garnishment, lawsuits and other collection efforts.
  • Chapter 7 can lower your monthly debt payments to a more manageable amount.
  • Completing the Chapter 7 bankruptcy process could lower your credit score, but you can rebuild your credit.
  • This bankruptcy option involves liquidating assets to repay creditors, which means that you will likely lose some of your property.
  • Chapter 7 takes less time than Chapter 13 bankruptcy.

While at least some of these aspects may seem appealing, you need to remember that you must qualify for Chapter 7 before having the ability to reap its benefits.

Steady income?

If you have a steady monthly income, Chapter 13 bankruptcy may better suit your circumstances. Rather than liquidating assets to repay creditors, this option allows for your debts to be repaid over time with the income you already generate.

Some information to consider about Chapter 13 bankruptcy includes the following:

  • This bankruptcy process can take three to five years to complete.
  • Your repayment plan must be approved by the court.
  • If you do not stick to the approved plan, the court could dismiss your case.
  • Chapter 13 may have a less severe impact on your credit than Chapter 7.
  • This process can also stop foreclosure and creditor actions.

Your specific circumstances will have a major impact on the bankruptcy option that could best suit your needs.