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Chapter 7 vs Chapter 13

HELPING YOU UNDERSTAND CONSUMER BANKRUPTCY

To understand which type of bankruptcy is right for you, you should consult with an experienced bankruptcy attorney. At The Winter Law Group, we seek to help you determine the best course of action to achieve debt relief, whether through Chapter 7, Chapter 13 or other debt solutions. Our Fresno bankruptcy attorney offers knowledgeable guidance and personal representation to help you understand your rights and options.

Chapter 7 bankruptcy is what most people think of when they think of bankruptcy. If you meet certain income requirements under the means test, you can obtain a discharge of most qualifying debts, including credit card debt, medical bills, personal loan debt and other debts.

If you do not qualify for Chapter 7, you may still have the option to file Chapter 13 bankruptcy. Chapter 13 reorganizes qualifying debts into a repayment plan, which is paid in monthly installments over three to five years. Once the plan is complete, all remaining debt provided for in the plan is discharged.

Chapter 7 bankruptcy remains on your credit history report for 10 years, while Chapter 13 remains for only seven. Additionally, you can only obtain a Chapter 7 discharge every eight years.

Which type is better?

To determine which type of bankruptcy is “better” for you depends almost entirely on your situation and your goals. While Chapter 7 is often the quicker path to debt relief, it can be difficult to keep certain secured assets such as your car or your home if you cannot quickly get current on overdue payments.

Although Chapter 13 requires ongoing payments, it can preserve assets by guaranteeing certain payments over time. In certain situations, it can also “strip off” a second mortgage or “cram down” car loans. For this reason, some people who qualify for Chapter 7 may benefit from filing Chapter 13 instead depending on their individual goals.

In the Central Valley, because home values have fallen so far, many people have been able to “strip off” the lien on their house held by the lenders on their second mortgage, having received a discharge of the remaining balance after the successful completion of a Chapter 13 bankruptcy!

• Review your situation in detail
• Answer your questions about bankruptcy and what possessions you can keep
• Give you the information you need to make an informed decision
• Help you navigate through the bankruptcy process