Deciding between Chapter 7 and Chapter 13 can be hard when facing bankruptcy. Both have their advantages and disadvantages. Plus, every situation is unique. Which one is best for you really depends on the specifics of your situation. The answer is different for everyone.
That said, here are some of the advantages of Chapter 7 and why you may want to use it:
- You are not subjected to a repayment plan, as you would be with Chapter 13. When the bankruptcy case is over, you get a fresh start.
- You can file no matter how much debt you have. There is no top-end limit.
- The case proceeds fairly quickly. It generally takes around three months. With Chapter 13, you still have to make payments on that repayment plan for three to five years.
- You do not lose your future earnings. You can get a job and really start over, financially speaking. Chapter 13 forces you to keep making those monthly payments, so future income is heavily impacted.
- It's often the best option if you have no current earnings. Chapter 13 wouldn't work because, with no monthly income, you're not going to make those payments. Chapter 7 prevents the debt from getting worse as you miss more and more deadlines.
Again, every situation is different. Chapter 7 is better for some people and Chapter 13 is better for others. The key is simple: You need to know all of your options, you need to know which types of bankruptcy you are eligible for and you need to know what legal steps to take.
Source: FindLaw, "Reasons to File for Chapter 7 Bankruptcy Instead of Chapter 13," accessed March 08, 2018