There are many different ways to file for bankruptcy. The routes for doing so are called bankruptcy “chapters.” The most beneficial bankruptcy chapter for you will depend on your individual circumstances. If you are a private individual filing for bankruptcy as opposed to a business, you will generally have two possible routes to bankruptcy: Chapter 7 and Chapter 13.
To understand why Chapter 7 bankruptcy is very popular, you should first understand the shortcomings of Chapter 13 bankruptcy. The following is an overview of the shortcomings of Chapter 13 bankruptcy and the benefits of Chapter 7 bankruptcy.
Chapter 13 bankruptcy
Chapter 13 bankruptcy offers debtors a way to restructure their repayment obligations so that they can keep up with them. Typically, debtors redistribute repayments over a period of between 3 and 5 years. The length of the repayment period is one of the main reasons why some debtors do not want to file for this Chapter. Those without a large income may not be able to keep up with repayments under this plan.
Chapter 7 bankruptcy
Chapter 7 bankruptcy is popular partly because it can be completed within a matter of months. It’s also possible to file if you have a very low income or no income at all and hence is very popular. However, it does include the liquidation of assets. Therefore if you have a large property or other significant assets, it may not be the best choice for you.
While Chapter 7 bankruptcy is a popular choice for many, it may not be the best choice for you. That’s why it’s important that you understand the different options and take action accordingly.
