At 713 Training.com we often get asked questions about determining if a client should file a chapter 7 or a chapter 13 bankruptcy. From our experience we have concluded that there are many factors that may effect what chapter a client qualifies for and which one would suite them best.
Income, assets, and type of debt play a big part in this determination. In many cases you may find pertinent financial information used in determining if a client should file a chapter 7 or chapter 13 bankruptcy. You will be much more valuable for the attorney if you are able to make correct observations and report these findings to the attorney.
Below is a list to help determine what chapter to file.
| Chapter 7 is commonly used when: | | |
| You have little property except for the basic necessities like furniture and clothing. | | |
| You have little or no money left after paying basic expenses each month—or you're not even meeting basic expenses. | | |
| Advantages of Chapter 7: | | |
| Most unsecured debts can be discharged (completely eliminated) | | |
| The process moves quickly—you may receive your discharge in just a few months | | |
| Creditors can't contact you while the automatic stay is in effect—or after debts are discharged. | | |
| Who can file under Chapter 7? | | |
| Debtors who have qualified under the 'means test' and completed a required pre-filing session with a credit counselor may file for Chapter 7 bankruptcy protection. | | |
| Chapter 13 is commonly used when: | ||
| You have significant equity in a home or other property and you want to keep it. | ||
| You have regular income and can pay your living expenses, but you can't keep up the scheduled payments on your debts. | ||
| Advantages of Chapter 13: | ||
| You can keep most of your property while spreading out time to pay past due accounts | ||
| You'll have 3-5 years to catch up delinquent accounts according to a schedule that you and the bankruptcy trustee have agreed is workable for you. | ||
| You'll make one monthly payment to the bankruptcy trustee for distribution—you'll have no direct contact with creditors during the protection period of 3-5 years. | ||
| Co-signers may be protected | ||
| Who can file under Chapter 13? | ||
| Any individual debtor whose unsecured debts are below $360,475 and whose secured debts are less than $1,081,400. | ||
Ready to start earning income drafting bankruptcy petitions from home? See our online bankruptcy petition training courses at www.713training.com. You can also join our online community at www.navba.org.