Which Bankruptcy Filing is Best? Chapter 7 or Chapter 13
When looking at the different chapters of bankruptcy, a Chapter 13 bankruptcy filing is the reorganization of finances on behalf of the consumer in order to repay debt as well as provide protection for their property such as the family home. When it comes to Chapter 13, a consumer files are reorganization strategy with the court and agrees to have the trustee oversee their personal budget and liquidation of assets where necessary. Also individuals in a Chapter 13 cannot make any large purchases or get any credit such as purchasing a new vehicle without the permission of the bankruptcy court. The benefit to a Chapter 13 over a Chapter 7 bankruptcy is if you have a lot of equity in your home you’ll be able to retain your home. The downside is you have a repayment plan that will be implemented and will take up to five years to completely pay off. The bankruptcy court and the trustee will require some of the debt to be completely paid off and there might be a percentage that the court might forgive and discharge. There is a mandatory budget required by the bankruptcy court when a Chapter 13 is filed that must be followed to the letter. When the payment plan is set up it might even include wage garnishments and watch how the individuals spend their money during the repayment plan. The court appointed Bankruptcy trustee will oversee all transactions and make sure that the creditors are repaid on a schedule according to the earnings of the individual.
