H. Brad Parker, P.C.

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Chapter 7 Or Chapter 13: Which Is Best?

Declaring bankruptcy is a confusing and overwhelming process. There are many types of bankruptcy you can declare, each with their own complex set of requirements and restrictions. The assistance of an attorney is necessary to help you navigate the bankruptcy process and make the best choice for your situation.

This page outlines the difference between Chapter 7 and Chapter 13 bankruptcy, the two most common types.

Chapter 7

Chapter 7 bankruptcy helps you pay back your debt through a liquidation procedure. Individuals, partnerships or business entities can file for Chapter 7 bankruptcy, and there are no considerate exclusions for those who wish to file. Once you file, a trustee takes all of your nonexempt property, liquefies the property and uses the funds to pay creditors.

The main advantages of this chapter include its quickness and affordability. The process usually takes three to five months, and there are no additional fees incurred beside the court and administrative fees involved in filing. After you file, you are no longer required to pay creditors and all collection efforts cease.

Once the liquidation procedure is complete, there is little in the way of a debt discharge through Chapter 7 bankruptcy. A few notable exceptions to debts that must be repaid even if you file include child support and alimony, student loans and other specific debt circumstances.

A considerable disadvantage to Chapter 7 bankruptcy is that you will very likely lose all nonexempt property.

Chapter 13

Chapter 13 bankruptcy helps you pay back your debt through a disbursement procedure. Only individuals can file for Chapter 13 bankruptcy. You must have a regular income. If your income surpasses a certain threshold, you will be required to file for Chapter 13 bankruptcy as opposed to Chapter 7 bankruptcy. Once you file, a debt restructuring occurs in the form of a repayment plan, which will last three to five years, depending on the amount of debt.

The main advantage of this chapter is the ability to retain the possession of all of your property, including your house and car. This plan is ideal if you want to stop the foreclosure of your home. After you file, all collection efforts cease as long as you continue to meet the terms of the established repayment plan.

Once the repayment plan is complete, there is little in the way of a debt discharge through Chapter 13 bankruptcy. A few notable exceptions to debts that must be repaid even if you file include child support and alimony, student loans and other specific debt circumstances.

Ready To Help

With the help of a lawyer, you can be sure you choose the right type of bankruptcy for you. Contact H. Brad Parker, P.C., today at 713-481-6025. You can also contact us through email.

Our firm is located in Houston, Texas, and represents clients throughout Houston and the surrounding areas.

We are a debt relief agency. We help people file for bankruptcy protection under the U.S. Bankruptcy Code.