How to Compare Chapter 7 vs. Chapter 13 Bankruptcy

Chapter 7 bankruptcy and Chapter 13 bankruptcy each have their advantages and disadvantages. If you are planning on filing for bankruptcy, you will need to determine if you qualify for both and which one you want to apply for. There are several steps that you can follow to help you compare Chapter 7 and Chapter 13 bankruptcy and decide which one is right for you.

Instructions

1. Figure out whether you qualify for Chapter 7 bankruptcy. You will if you have a monthly income that is less than or equal to the median income in your state. If you don't qualify, then you have no other choice than to file for Chapter 13, unless you can pass a means test.

2. Decide which type of bankruptcy you prefer, if you qualify for both. With Chapter 7, you will have your debts forgiven. With Chapter 13, you will still have to pay your debts, though the amount may be lowered.

3. Determine if you have any big name items that you would like to keep. If you don't, then you can choose Chapter 7. If you do, then you would be better off filing for Chapter 13 in order to keep them.

4. Calculate if you will be able to repay your debts with the 5-year payment schedule that you will be given with a Chapter 13 bankruptcy. Even if you have big ticket items that you want to keep, you may still have to file for Chapter 7 if you cannot afford to pay your debts according to this schedule.