Financial struggles can be difficult for Mobile residents to overcome on their own. When they cannot work to reduce their debts and feel stuck with bills they cannot pay, it may be time to talk to professionals who understand legal and effective methods of debt relief. Bankruptcy attorneys are excellent resources for those who wish to learn more about ways to satisfy their creditors and reach financial freedom.
There are two types of bankruptcy that most individuals utilize to achieve stronger financial footing: Chapter 7 bankruptcy and Chapter 13 bankruptcy. There are many differences that distinguish them from each other, and this post will attempt to clarify some of those differences. This post does not offer any legal or financial guidance on the topics of bankruptcy and debt relief.
The big differences between Chapter 7 and Chapter 13
One of the biggest differences between these two forms of bankruptcy is the capacity of the filers’ abilities to repay their debts. For example, a person who has disposable income will likely not qualify for Chapter 7 bankruptcy. That is because Chapter 7 bankruptcy utilizes liquidation to repay creditors due to the debtors’ extreme insolvency. Chapter 13 bankruptcy is reserved for individuals who qualify and who have some disposable income to put toward the repayment of their debts.
Chapter 7 and Chapter 13 bankruptcy have other differences. How a person qualifies, how long it takes to reach discharge, and what a person can protect from the bankruptcy process may all differ between the two bankruptcy formats. Before committing to a form of personal bankruptcy, a debtor should talk to a bankruptcy attorney.
Which form of bankruptcy is better?
It is impossible to say that one form of bankruptcy is better than the other in all financial and legal cases. An individual’s situation will dictate which form, if either, is suitable for the alleviation of their financial losses. Chapters 7 and 13 serve different debtors with different needs, and each format is necessary to support the financial stability of Americans throughout the country.
