When considering bankruptcy, many people wonder what the best option for them will be: a chapter 7 bankruptcy or a chapter 13 bankruptcy. The answer to this question largely depends on an individual’s specific circumstances. When determining if a Chapter 7 or a Chapter 13 bankruptcy is right for you, it is important to meet with an attorney; qualified bankruptcy attorneys will be able to ask you the right types of questions to assist you with determining what your best option will be. Many things are taken into account when deciding which chapter of bankruptcy is best for you, such as your income, the types and value of property you have, and the types of debts you have.
Often times, people assume that a Chapter 7 bankruptcy will be the best option for them; people hear that it will wipe out their debts, so they are very interested in this as an option for them. However, generally speaking, a Chapter 7 bankruptcy is typically a better option for individuals who do not own much property, or own property with little to no equity in it, and who have large amounts of unsecured debts, like credit card and medical bills. Chapter 7 bankruptcies are also better for individuals who do not have large annual income.
If you have large amounts of equity in property and make a large salary through work, a Chapter 13 might be a better option for you. Equity can simply be explained as how much your property is worth compared to how much you still owe on it. If you have a house that is worth $150,000 if you sold it, and you only owe $100,000 on your mortgage, you have $50,000 of equity in your house. Unless you plan to sell your house to pay back your creditors with the money you would receive, you would most likely have to do a Chapter 13 bankruptcy. This is due to rules set forth by the bankruptcy code. If you have large monthly income and high amounts of equity in property that you want to keep, you may have to do a chapter 13.
Bankruptcy law is complex and often times very confusing. If you are unsure about which type of bankruptcy would be best for you, contact a St. Louis Bankruptcy Attorney today! We can help you determine what your best options will be.