Which is better, a Chapter 13 Bankruptcy or a Chapter 7 Bankruptcy? Honestly, the answer is it depends! Sometimes, you don’t have much of a choice in the matter. As a general rule, if you have the ability to pay back some of your debt you are expected to do so. That means a Chapter 13 Bankruptcy. If you don’t have the ability to pay back your creditors, than maybe we think about a Chapter 7 Bankruptcy. I wish the world was always that simple. Unfortunately, it is not.
From a pure credit worthiness standpoint, in my opinion filing a Chapter 7 Bankruptcy is much better than a Chapter 13 (where you make payments back to your creditors). Now I know this sounds a bit crazy, but hang with me for a moment. If I am a future lender, would I prefer to see you apply for a loan with me in the middle of a Chapter 13 Bankruptcy where you still are technically legally liable for the debt or would I prefer to see you after a Chapter 7 Bankruptcy discharge where your liability for the debt is gone? After a 7 right? Of course! If you have no debt, I am more assured you will pay me back!
But there are reasons to consider a Chapter 13 Bankruptcy. Income is one of them. If you make a lot of money and have disposable income (money left over after you pay your reasonable and necessary expenses) you must do a Chapter 13 Bankruptcy. There are many other reasons to consider a Chapter 13 Bankruptcy too: mortgage arrears, delinquent vehicle payments, taxes, possession of non-exempt assets, etc. Everyone’s situation is so unique and different remedies are suited for different situations.
When the time is right, or when you are ready, reach out to Minnesota’s HIGHEST GOOGLE reviewed bankruptcy law firm at www.kainscott.com. You will be glad you did!