When is Chapter 13 Bankruptcy a Better Option than Chapter 7?

 Posted on December 00, 0000 in Bankruptcy

Filing for bankruptcy—no matter which chapter you choose—can be a mentally exhausting process. For many Americans, though, bankruptcy offers an opportunity to regain financial independence and stop creditor actions.

In many cases, Chapter 13 bankruptcy is a smarter option than Chapter 7. For example, if you have fallen behind on business payments or your mortgage, Chapter 13 bankruptcy may allow you to maintain your property. Additionally, Chapter 13 bankruptcy may allow you to reinstate your original mortgage agreement if you can make the overdue payments within a specified period. In this way, Chapter 13 bankruptcy can put homeowners on the path to a debt-free life.

Generally speaking, people with valuable property that Illinois bankruptcy exemptions do not cover should consider filing for Chapter 13 bankruptcy. This chapter may also be ideal if your income is too high to be eligible for Chapter 7 bankruptcy.

According to the Illinois Attorney General, Chapter 7 bankruptcy may discharge certain debts. These may include credit-card debt, medical bills, utility bills, and collection agency accounts. Non-dischargeable debt includes student loans, debts for child or spousal support, and certain tax debts. If Chapter 7 bankruptcy will not discharge your debts, then Chapter 13 may be a better option.

Chapter 13 bankruptcy comes with several advantages. For example, if you can afford a debt repayment plan, you may be able to keep all of your non-exempt and exempt property. Although Chapter 13 may not discharge your debts like Chapter 7 bankruptcy, creditors may agree to debt reduction to create a reasonable payment plan. Moreover, Chapter 13 bankruptcy protects filers against the collection efforts of creditors. This means that they will not be able to garnish your wages. If the debt repayment plan is successful, co-signers will also be safe from creditor collection efforts. Of course, people who file for Chapter 13 bankruptcy will have more time to pay non-dischargeable debts.

Consult a Legal Professional before Filing Bankruptcy

No source of information can match the advice of an experienced bankruptcy attorney. Colleen Thomas of the Thomas Law Office has more than 16 years of legal experience. Her team has been helping clients in Kane and McHenry Counties for more than 14 years. If you would like to schedule a consultation with a McHenry County bankruptcy attorney, call our office at 847-426-7990.