The decision to file bankruptcy is a big one. However, before even filing a debtor in Long Island will need to decide is whether to file for Chapter 7 bankruptcy or Chapter 13 bankruptcy. Today we are going to examine some reasons why a debtor might decide that filing for Chapter 7 bankruptcy is right for them.
First of all, Chapter 13 bankruptcy requires a debtor to enter into a debt repayment plan. If a debtor does not have the financial means to continue paying down his or her debt for three to five years, as is necessary for a Chapter 13 bankruptcy, then filing for Chapter 7 bankruptcy may be the better choice.
In addition, sometimes a debtor cannot wait for years to find relief from his or her creditors. A Chapter 7 bankruptcy can be completed in a matter of months, from the initial filing to the court’s discharge order. This short time span may be an advantage to those who need to settle their debts quickly, so they can acquire a fresh financial start.
Moreover, Chapter 7 bankruptcy can be attractive, as it may get rid of most of a debtor’s unsecured debt. A Chapter 7 bankruptcy can extinguish personal loans, medical debt, and credit card balances. And after the process is complete, the debtor is no longer responsible for the debts that have been discharged.
All of this being said, sometimes a debtor is ineligible for Chapter 7 bankruptcy. For example, there are income requirements that must be met and a debtor must pass a “means test” to determine if they qualify for Chapter 7. However, if they meet the requirements, some debtors will decide that filing for Chapter 7 bankruptcy is the most appropriate choice for them. Those who have additional questions about the bankruptcy process and how it could beneficial for them should consider contacting a bankruptcy attorney of their choosing.
Source: FindLaw, “Chapter 13 vs. Chapter 7 Bankruptcy,” accessed July 4, 2016