The Difference between Chapter 7 & Chapter 13 Bankruptcy
Seek Guidance from Our Cincinnati Bankruptcy Lawyer
The Southard Law Firm, L.L.C. provides legal representation for Chapter 7 bankruptcy and Chapter 13 bankruptcy filings. Our bankruptcy lawyer in Cincinnati can explain the differences between Chapter 7 and Chapter 13 to help you find the right way to resolve your debt problems and move forward to a more secure financial future.
If you are unsure about how to regain control of your financial situation, call (513) 399-8806 for a consultation.
Understanding Chapter 7 Bankruptcy
Chapter 7 bankruptcy, also known as liquidation, wipes out most unsecured debt to give you a fresh start. You can eliminate credit card debt, medical bills, judgments, and wage garnishment. To qualify for Chapter 7, your disposable income must be low enough to pass the means test. The process takes up to five months, but you will be free of debt at the end. It is important to note that this type of bankruptcy cannot alter mortgages or reduce vehicle loan balances to fair market value.
How Chapter 13 Works
If you do not qualify for Chapter 7 based on the means test, have a regular source of income with some disposable income to pay toward your debts, or want to keep your home and car, Chapter 13 may be the best option for you. There are limits to how much secured and unsecured debt an individual can have when filing for bankruptcy, but most people easily meet that requirement.
Chapter 13 allows you to:
- Pay off a portion of your debt with a repayment plan
- Make monthly payments that are manageable with your income
- Get out of debt within three to five years
- Remove second mortgages that impair your exemption
- Pay back a lower percentage of the balance on second mortgages
- Reduce vehicle loan balances to the fair market value of the vehicle
Every situation is unique, so we recommend scheduling a consultation with our bankruptcy attorney in Cincinnati. We can explain the differences between Chapter 7 and Chapter 13 bankruptcy, evaluate your situation, and discuss your financial goals so that you can make an informed decision for your family.