Filing for Bankruptcy: Chapter 7 vs. Chapter 13

Are you an individual thinking about filing for bankruptcy? Filing for bankruptcy, especially as an individual, can be an intimidating process. Where do you start? Well, you need to know your options! Most individuals filing for bankruptcy file either a Chapter 7 or Chapter 13. What is the difference between Chapter 7 and Chapter 13? Here you’’ find the best option for you when filing for bankruptcy!

Let’s start with the basics. Why do people file for bankruptcy? The four main reasons people file for bankruptcy are medical bills, divorce, job loss or business failure. According to the American Bankruptcy Institute, 15,746 Arizonians filed for bankruptcy in 2018. 2,173 Arizonians have already filed in 2019. Bad things can happen to good people. The good news is, you are not alone!

The Chapter 7 Bankruptcy: Liquidation

Filing for BankruptcyChapter 7 allows you to wipe the slate clean of debt by getting rid of nonexempt property to pay creditors. What about your car and house? Luckily, you can keep your house and car, in most cases, in exchange for wiping away your debt. Should I file a Chapter 7 bankruptcy? If you answer ‘no’ to the following questions, a Chapter 7 bankruptcy is right for you!
Ask yourself:

  • Do you own a house or other valuable property such as a car, RV, etc.?
  • Do you want to spend years getting rid of debt?
  • Do you have non-dischargeable IRS taxes?
  • Do you have secured debt?

The Chapter 13 Bankruptcy: Reorganization

Chapter 13 allows you to make a payment plan to repay your debts. Why is Chapter 13 better than just paying back the credit card companies? Chapter 13 gives your payments to a court-appointed trustee rather than directly to the creditors. The trustee has no financial interest, nothing to gain from your payments and no hidden agenda. Another advantage of Chapter 13 is you only must pay a percentage of your debt back to creditors. You heard that right! Only a percentage, not your entire debt. Should I file a Chapter 13 bankruptcy? If you answer ‘yes’ to the following questions, a Chapter 13 bankruptcy is the way to go!

Ask yourself:

  • Do you have non-dischargeable debt?
  • Do you own a house or other valuable property such as a car, RV, etc.?
  • Do you have a home foreclosure you want to block?
  • Do you need time to stretch out your mortgage payments?
  • Do you want to pay off at least some of your debt to creditors?

Now that you have read through all this information, please contact the Zolman Law to help you tackle your debts and get back on your feet. What is stopping you?

Contact Us for a Free Consultation

As one of Arizona’s leading corporate law firms, the team at The Zolman Law are proud to have helped more than 2,000 people.  If you are considering filing for bankruptcy or have any other legal questions affecting your business, please call the Zolman Law in Mesa, Arizona today for a free initial consultation.