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Filing Bankruptcy: Which Chapter Do You File?

Posted By Allmand Law Firm, PLLC || 15-Nov-2013

Foreclosure Options

Have you ever asked yourself, "What chapter bankruptcy should i file?" When bankruptcy is an option you are considering it is likely you may have questions about which chapter you should file. Some debtors wonder if they can choose which chapter to file or should they consider one over the other. Most people file either Chapter 7 bankruptcy or Chapter 13 bankruptcy , but it depends on personal circumstances and meeting eligibility requirements. Review your situation with a bankruptcy expert.

When is Chapter 7 is an Option?

If you are looking to discharge or eliminate debt you may qualify for this chapter. There is a means test that is taken early in the process to help determine whether you are eligible. The type of debt you have and income earnings help determine if you can file this chapter. Unsecured debts such as medical bills, credit card debt, and personal loans may be wiped out. If you have priority debts (such as child/spousal support, recent tax debt) or secured debt (such as a mortgage, car loan) you may still be responsible for paying them after your case is completed.

When is Chapter 13 is an Option?

This chapter is a repayment plan that helps debtors restructure debt obligations to prevent repossession, foreclosure or to help get caught up on priority and secured debt payments. This chapter is also an option for people who may not qualify for Chapter 7. As a court-approved repayment plan you can cure default mortgage or car loan payments without interest. You can also catch up on missed child/spousal support payments and back income taxes not eligible for discharge. If you have a second or third mortgage it may be eligible to be "stripped" or eliminated at the end of your case.


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