There are multiple types of bankruptcy. Which type you choose depends on your financial situation and your ability to pay back your debt given specific types of assistance. Typically, individuals file for either Chapter 13 or Chapter 7 bankruptcy. But what is Chapter 13 bankruptcy and what is Chapter 7 bankruptcy?
Understanding the differences is just the start of making the right decisions when filing for bankruptcy. The better you understand these types of bankruptcy, the more likely you are to be in a good financial situation when your bankruptcy is complete. This information can also help you determine whether it is best to file for Chapter 7 bankruptcy or Chapter 13.
What Is Chapter 13 Bankruptcy?
In Chapter 13 bankruptcy you are negotiating a repayment of some or all of your debt over 36-60 months. I will examine your finances and create a payment plan that you follow and pay monthly to the chapter 13 trustee. At the end of the repayment period, if you have made every payment as ordered, most remaining debt will be discharged.
Chapter 13 bankruptcy is more a consolidation of debt than it is a liquidation. This puts you on more solid ground and usually allows you to keep your home afterward.
What Is Chapter 7 Bankruptcy?
Chapter 7 bankruptcy effectively wipes out most debt. When you file for Chapter 7 bankruptcy, you are telling the court that you are unable to pay back your debts and that you would be unable to pay a significant portion of them even if your debts were restructured. The court will examine your finances to determine whether this is accurate and that you qualify for chapter y. If the court determines that you qualify, you will be required to liquidate assets or agree to pay for assets, in order to keep them, that are not exempt or protected by law.
Are you considering filing for bankruptcy in Florida? The decision about which type of bankruptcy to file could impact your financial situation for the rest of your life. Don’t make that decision alone. Contact Lewis Roberts, PA today at (407) 749-0080 to schedule a free consultation with me.
Can and Should I Convert to Chapter 7 After Filing Chapter 13?
The good news is that filing for Chapter 13 bankruptcy doesn’t lock you into that decision. You may convert a Chapter 13 bankruptcy filing to Chapter 7 at any time by filling out the appropriate paperwork and paying the conversion cost to the court, as long as you qualify for chapter 7. While the court may make it easy to convert your bankruptcy procedure, that doesn’t mean it is necessarily the right decision.
Whether you should convert your bankruptcy is a much more difficult question to answer. The answer to this question will depend on the state of your finances and what benefits you want to get from bankruptcy protection.
Since you originally filed for Chapter 13 bankruptcy, that suggests that you believed that you were capable of paying off a portion of your debts, as long as they were reorganized and you were safe from the stress of debt collectors. If you suddenly don’t think that is true, that probably means your financial situation has changed. But what has changed, and how does that affect your finances? I complete an extensive financial analysis of this new information. It is possible that the situation isn’t as bad as you think, or there may be legal options to mitigate it.
For example, if you discover that there is another creditor you didn’t know about, that might make you think that your scheduled payments will be more than you can afford. This isn’t a sure thing, though. Typically, the court would prefer you pay off your debts as much as possible rather than discharge them through Chapter 7 bankruptcy. It might be possible to make an arrangement that is still acceptable to the court and that fairly compensates your creditors.
Alternately, if you suddenly lose your job after filing for Chapter 13 bankruptcy, you may be in a situation where it is no longer possible to meet your obligations, even after they are restructured. In that situation, I would probably advise converting your Chapter 13 bankruptcy to Chapter 7 bankruptcy. This type of bankruptcy has more long-term financial consequences, but it should protect you in the short term from economic collapse.
Contact Lewis Roberts, PA to Schedule a Free Consultation Today
If you live in Florida and you are considering filing for bankruptcy, the first thing you should do is contact a bankruptcy lawyer. I will give you a free consultation where we will discuss the details of both types of bankruptcy so you can make the right financial and legal decision.
Ready to correct your financial situation? Contact my law firm today at (407) 749-0080 to schedule a time to discuss your legal options.
Attorney Lewis Roberts
The weight of debts that one cannot pay carries financial stress into every waking moment. It is time for this to end. Lewis Roberts, PA, offers solutions to relieve these worries. With over 20 years of experience in helping individuals overcome the burden of debt, bankruptcy attorney Lewis Roberts presents a range of options tailored to each unique situation. Clients can trust his advice on any matter related to debts, as he identifies appropriate options and explains the paths to debt relief clearly and carefully. This ensures that clients make the best decisions for their future. [ Attorney Bio ]
