How do I know which Chapter of bankruptcy to file?

UPDATED: Apr 17, 2014

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How do I know which Chapter of bankruptcy to file?

A 7 or 13?

Asked on April 17, 2014 under Bankruptcy Law, Ohio


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

Bankruptcy is a complicated subject, and if at all possibe, you should consult with a bankruptcy attorney before proceeding. That said, Chapter 7 is a good choice if you don't have much in the way of assets (e.g. real estate; bank or brokerage accounts; valuable personal property, like vehicles) to protect, because in Chapter 7, all your assets, minus certain ones that are protected, are liquidated--basically, sold for the benefit of your creditors. Your creditors get as much money as they can get from the sale and distribution of your assets, then your debts are discharged.

Chapter 13 is a good choice if you have assets you'd like to protect but have the income to handle to a payment plan, if the debts are restructured in a way that's favorable to you. Under chapter 13, the court will set out a "plan"--basically a court-approved budget--under which all your discretionary income will go to paying creditors as much as possible for the next (usually) 5 years, after which your debts are discharged. Your assets are not liquidated.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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