Basically, if you have few assets, do not have a regular income or you do not have enough income to meet your basic needs and have something left over to help pay down your debt, then Chapter 7 bankruptcy might make the most sense for you. It will allow you to start fresh as quickly as possible, with the possibility of receiving a discharge of your debt in as little as a few months.
If, however, you have a regular income and can meet you basic living expenses with a little bit left over every month, your goal may be to reorganize your debts to a manageable level in order to pay your way out of debt. In this case, Chapter 13 bankruptcy would probably be the right choice.
In a Chapter 7 bankruptcy, all of your non-exempt property would be sold (“liquidated”), and the proceeds of the sale would be used to pay off a portion of your debts. If you have few assets, this type of bankruptcy may be the best option. For more information on which assets are considered exempt from sale in a bankruptcy proceeding, see the page on Chapter 7 bankruptcy.
If, on the other hand, you have a lot of non-exempt assets, such as a house, or you have regular income, you may have more to lose by having your assets liquidated to satisfy your debts, or a portion of your debts, than you would by creating a payment plan to pay off your debts over several years. In that case, you should probably consider filing for bankruptcy under Chapter 13.
Other related articles:
- Who Should File For Bankruptcy?
- Chapter 7
- Chapter 13
- How Do I Rebuild My Credit After Bankruptcy?
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