When Choosing Chapter 13 Over Chapter 7

Up against the wall, with seemingly nowhere to turn, and with creditors knocking down the door, it can be difficult to know what course of action to take for the betterment of your financial future. Even if you should make the decision to file for bankruptcy, there are a number of other decisions to be made. Consulting a bankruptcy lawyer is always a good idea, as they will be able to help you determine whether Chapter 7 or Chapter 13 bankruptcy is the right filing for you.

Chapter 13 Pros and Cons

Filing bankruptcy protection under Chapter 13 has its advantages and disadvantages. Most importantly, under a Chapter 13 repayment plan you will be able to keep most or all of your important assets, such as your home and your car. In Chapter 7 liquidation, these are often lost. So Chapter 13 makes sense if you simply cannot lose your home or your car. But Chapter 13 also allows you to keep non-exempt property, which would almost certainly be liquidated under Chapter 7.

Chapter 13 affords the additional benefit of renegotiating non-dischargeable debts such as back taxes and student loan debts into more manageable payments; since these cannot be discharged in bankruptcy of any kind, Chapter 7 filing offers no such benefit when faced with these types of debt.

Chapter 13 still requires you to pay back a portion of all debts, so it is not the best option if you are unable to make even the reduced payments filing would require. Everyone’s financial situation is unique, so it is important to consult a professional Dallas bankruptcy lawyer to determine the proper course for your financial future.