Chapter 7 or Chapter 13 Bankruptcy?

At we often get asked questions about determining if a client should file a chapter 7 or a chapter 13 bankruptcy.  From our experience we have concluded that there are many factors that may effect what chapter a client qualifies for and which one would suite them best.

Income, assets, and type of debt play a big part in this determination.  In many cases you may find pertinent financial information used in determining if a client should file a  chapter 7 or chapter 13 bankruptcy. You will be much more valuable for the attorney if you are able to make correct observations and report these findings to the attorney.

Below is a list to help  determine what chapter to file.

Chapter 7 is commonly used when:
You have little property except for the basic necessities like furniture and clothing.
You have little or no money left after paying basic expenses each month—or you’re not even meeting basic expenses.
Advantages of Chapter 7:
Most unsecured debts can be discharged (completely eliminated)
The process moves quickly—you may receive your discharge in just a few months
Creditors can’t contact you while the automatic stay is in effect—or after debts are discharged.
Who can file under Chapter 7?
Debtors who have qualified under the ‘means test’ and completed a required pre-filing session with a credit counselor may file for Chapter 7 bankruptcy protection.
Chapter 13 is commonly used when:
You have significant equity in a home or other property and you want to keep it.
You have regular income and can pay your living expenses, but you can’t keep up the scheduled payments on your debts.
Advantages of Chapter 13:
You can keep most of your property while spreading out time to pay past due accounts
You’ll have 3-5 years to catch up delinquent accounts according to a schedule that you and the bankruptcy trustee have agreed is workable for you.
You’ll make one monthly payment to the bankruptcy trustee for distribution—you’ll have no direct contact with creditors during the protection period of 3-5 years.
Co-signers may be protected
Who can file under Chapter 13?
Any individual debtor whose unsecured debts are below $360,475 and whose secured debts are less than $1,081,400.

his list is just a quick overview of some of the most common reasons for choosing which chapter to file for. At we have all the training materials and personal support that you will need to prepare the best petitions possible.  Properly trained V.B.A.’s will bring extra value to any law firm and their clients, thus resulting in more business for the V.B.A.  Let’s make sure that we are all properly trained and able to get our clients the correct help they need.

-The 713 Training Team


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