Bankruptcy – Chapter 7 Or Chapter 13?

The way the economy is today more and more people are looking into filing for bankruptcy. There are two kinds of bankruptcy and before you file you need to research both so you know which one is best for you and suits your situation best that you are in. There are several questions that you must ask yourself before filing here are a few?

The first most popular question asked is: If I choose bankruptcy what happens to my stuff? Most of us hear horror stories about the law coming and throwing us out on the street if we file for bankruptcy. This is not true. Majority of the time when you choose to file you have the option of keeping your personal property. The court will not come in and sell your stuff if it doesn’t value it at more than what you owe. If this is the case then the court may take your belongings and auction it so they can pay your debts off.

If you have multiple debts then chances are if you choose not to file bankruptcy then you may lose your belongings because creditors can take money from your paychecks, and bank accounts which may make you miss house and vehicle payments.

Can I file alone or does my husband have to file with me as well? If most of the debts are in your name only, your husband may not have to file. Creditors usually cannot hound a spouse who did not file, unless he/she is a co-signor on the account. Then the bankruptcy should not be marked against the spouse’s credit report. The rules do differ, however, from county to county so make sure you check with your lawyer representing you to make sure.

A chapter 7 bankruptcy clears your name from all debts therefore erasing all owed funds, this however does mark your credit for up to 10 years. In a chapter 13 bankruptcy however you agree to still pay the creditor back in payments that are set up by the courts sometime even leaving you with barely enough to eat on. A chapter 13 bankruptcy goes on your credit for up to 13 years.

After reaching your options you need to consult with a lawyer or attorney so he can then look at your past history as well as debt to income ratio and give you his or her advice on what you should do in the current situation. Generally there is a minimal charge for his or her fees in the price range of a thousand dollars but having a lawyer can be beneficial by having all the paper work taken care of as well as stop harassing creditors call.

Before you make the final choice to file a chapter 7 or chapter 13 bankruptcy you need to look into all possible options and decide what is best for you.

Dawn Enstruthe writes for Ginko Financial which is a website containing details on ways to consolidate student loans and very cheap business debt financing.