When Should You Go for Chapter 13 Bankruptcy Instead of Chapter 7 Bankruptcy?

When it comes to filing for bankruptcy, it is necessary that you know the difference between chapter 7 and chapter 13 bankruptcy law.

The most prominent difference between chapter 7 and 13 is what you will have to pay. If you are filing for chapter 7, almost all of your debt is forgiven. You don’t have to pay back any of it apart from a few exceptions. For chapter 13 Bankruptcy, you as the debtor will have to pay the bigger chunk of the money that you will owe to others.

So, apparently, in Pennsylvania, filing for Chapter 7 sounds about right, isn’t it? Well, not necessarily. Our Pittsburgh bankruptcy lawyer can help you understand why Chapter 13 bankruptcy can be a better option for you.

The Advantages of Chapter 13 Bankruptcy

Even though it might sound like a bad idea, filing for Chapter 13 bankruptcy can be a better idea for you. It all depends on the amount that is tied up to your property and the income you have.

It might happen that you have lots of equity in a property and you want to keep it. In that case, chapter 13 is your best option. During the bankruptcy process, it is beneficial to keep the assets that are valuable rather than having all the debts discharged in return for liquidating your property.

In the following points, you will get to see the breakdown of the benefits of Chapter 13:

  • When you are holding on to most of your property, you can get an extension of three to five years for paying off the debts.
  • If there is any co-signer in the debt, it is more likely that they are protected.
  • You will just have to make one payment to the court-appointed trustee for bankruptcy. And in return, you will get the protection period during which the creditors won’t be able to contact you.

This is surely a better option for debtors as per the opinion of our Pittsburgh bankruptcy lawyer.

Looming Debt

You might get a salary that can help you keep afloat by paying for the bills and regular expenses. But this salary is not sufficient for you to maintain regular payment of debts. In this case, Chapter 13 is the best bet for you.

However, if you have very little to no income and you are without any savings, then it is better to file Chapter 7 bankruptcy that will allow you a fresh start.

But choosing one of these two options can be tricky. And that is why you need to get in touch with an experienced Pittsburgh bankruptcy lawyer to get guidance and advice.

What If You are Not Eligible for Chapter 7 Bankruptcy?

If you are thinking that choosing the chapter for bankruptcy is always in your hand, then you are mistaken. There are certain conditions that make you eligible for filing chapter 7 bankruptcy.

  • For the six months before the filing of bankruptcy, you should have a monthly income that is more than the median income for a household of your size in Pennsylvania.
  • You have enough disposable income to pay off the debt that you owe regularly.

These two conditions can prevent you from filing for chapter 7 bankruptcy leaving chapter 13 to be your only option.

For a more professional opinion, come to us at Pittsburgh Bankruptcy Law Group. We will help you get through this tough period.

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