{"id":3206,"date":"2021-11-19T09:00:59","date_gmt":"2021-11-19T14:00:59","guid":{"rendered":"https:\/\/thegraftonfirm.com\/?p=3206"},"modified":"2021-11-30T21:12:04","modified_gmt":"2021-12-01T02:12:04","slug":"how-to-choose-between-chapter-13-or-chapter-7","status":"publish","type":"post","link":"https:\/\/thegraftonfirm.com\/bankruptcy\/how-to-choose-between-chapter-13-or-chapter-7","title":{"rendered":"How to Choose Between Chapter 13 or Chapter 7"},"content":{"rendered":"<p><a href=\"https:\/\/thegraftonfirm.com\/wp-content\/uploads\/2021\/11\/Chapter-7-vs-13.webp\"><img fetchpriority=\"high\" decoding=\"async\" class=\"aligncenter wp-image-3207\" title=\"Chapter 7 vs 13\" src=\"https:\/\/thegraftonfirm.com\/wp-content\/uploads\/2021\/11\/Chapter-7-vs-13.webp\" alt=\"Chapter 7 vs 13\" width=\"700\" height=\"467\" srcset=\"https:\/\/thegraftonfirm.com\/wp-content\/uploads\/2021\/11\/Chapter-7-vs-13.webp 1024w, https:\/\/thegraftonfirm.com\/wp-content\/uploads\/2021\/11\/Chapter-7-vs-13-300x200.webp 300w, https:\/\/thegraftonfirm.com\/wp-content\/uploads\/2021\/11\/Chapter-7-vs-13-768x512.webp 768w\" sizes=\"(max-width: 700px) 100vw, 700px\" \/><\/a><\/p>\n<p><span style=\"font-weight: 400;\">Bankruptcy Chapter 7 Vs Chapter 13 \u2013 Which bankruptcy is right for you? <a href=\"\/bankruptcy\/more-reasons-not-to-file-bankruptcy-by-yourself\">When you decide to file bankruptcy<\/a> has a lot to do with what is going on in your life. Some people have medical bills from a surgery they cannot pay for. Another person may have lost their job and can&#8217;t make ends meet. There are numerous reasons why anyone may need to <a href=\"\/bankruptcy\/file-bankruptcy-by-yourself-versus-with-a-lawyer\">file a bankruptcy<\/a>.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In this post, you will find out if Chapter 7 or Chapter 13 is the right option for you. While we can share information behind both chapters, talking to a <\/span><a href=\"https:\/\/thegraftonfirm.com\/\"><span style=\"font-weight: 400;\">competent bankruptcy attorney in Towson <\/span><\/a><span style=\"font-weight: 400;\">is a smart move.\u00a0<\/span><\/p>\n<p>&nbsp;<\/p>\n<h2><span class=\"ez-toc-section\" id=\"The_General_Idea_Behind_Bankruptcy\"><\/span><b>The General Idea Behind Bankruptcy<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2><div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<label for=\"ez-toc-cssicon-toggle-item-66373181ac585\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-66373181ac585\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/thegraftonfirm.com\/bankruptcy\/how-to-choose-between-chapter-13-or-chapter-7\/#The_General_Idea_Behind_Bankruptcy\" title=\"The General Idea Behind Bankruptcy\">The General Idea Behind Bankruptcy<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/thegraftonfirm.com\/bankruptcy\/how-to-choose-between-chapter-13-or-chapter-7\/#Features_of_American_Bankruptcy\" title=\"Features of American Bankruptcy\">Features of American Bankruptcy<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/thegraftonfirm.com\/bankruptcy\/how-to-choose-between-chapter-13-or-chapter-7\/#Chapter_13_vs_Chapter_7\" title=\"Chapter 13 vs. Chapter 7\">Chapter 13 vs. Chapter 7<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/thegraftonfirm.com\/bankruptcy\/how-to-choose-between-chapter-13-or-chapter-7\/#Advantages_of_Using_Chapter_7_Bankruptcy\" title=\"Advantages of Using Chapter 7 Bankruptcy\">Advantages of Using Chapter 7 Bankruptcy<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/thegraftonfirm.com\/bankruptcy\/how-to-choose-between-chapter-13-or-chapter-7\/#Chapter_7_Bankruptcy_Drawbacks\" title=\"Chapter 7 Bankruptcy Drawbacks\">Chapter 7 Bankruptcy Drawbacks<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/thegraftonfirm.com\/bankruptcy\/how-to-choose-between-chapter-13-or-chapter-7\/#Chapter_13_Bankruptcy_Disadvantages\" title=\"Chapter 13 Bankruptcy Disadvantages\">Chapter 13 Bankruptcy Disadvantages<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/thegraftonfirm.com\/bankruptcy\/how-to-choose-between-chapter-13-or-chapter-7\/#Choosing_Chapter_13_Bankruptcy_Has_Its_Perks\" title=\"Choosing Chapter 13 Bankruptcy Has Its Perks\">Choosing Chapter 13 Bankruptcy Has Its Perks<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/thegraftonfirm.com\/bankruptcy\/how-to-choose-between-chapter-13-or-chapter-7\/#Do_the_Right_Thing-_Speak_to_one_of_the_Grafton_Firms_lawyers\" title=\"Do the Right Thing- Speak to one of the Grafton Firm&#8217;s lawyers.\">Do the Right Thing- Speak to one of the Grafton Firm&#8217;s lawyers.<\/a><\/li><\/ul><\/nav><\/div>\n\n<p><span style=\"font-weight: 400;\">Bankruptcy is a legal procedure that protects persons and companies from creditors. <\/span><span style=\"font-weight: 400;\">Bankruptcy may help people with debt troubles have a new financial start.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Bankruptcy relieves certain elderly of their legal responsibility to pay debts. Others may catch up on mortgages and vehicle loans or pay off bills at a reduced rate.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Filing for bankruptcy also precludes most creditors from collecting debts until the bankruptcy procedure is completed.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Features_of_American_Bankruptcy\"><\/span><b>Features of American Bankruptcy<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">In the US, the primary chapters are 7, 11, and 13. A bankruptcy case starts an estate. All debtor&#8217;s property interests as of the case&#8217;s commencement are included in the estate.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The Bankruptcy Court has jurisdiction over bankruptcy cases, but each district court may &#8220;refer&#8221; cases to the bankruptcy court. The Bankruptcy Court hears all bankruptcy matters under most district court &#8220;reference&#8221; orders.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The Attorney General appoints trustees for each of the US&#8217;s 21 regions. These trustees oversee a panel of private <\/span><a href=\"https:\/\/thegraftonfirm.com\/debt-resolution-services\/chapter-7\"><span style=\"font-weight: 400;\">Chapter 7<\/span><\/a><span style=\"font-weight: 400;\"> trustees. A US trustee may also be heard on any issue in a bankruptcy case except filing a <\/span><a href=\"https:\/\/thegraftonfirm.com\/debt-resolution-services\/chapter-11\"><span style=\"font-weight: 400;\">Chapter 11<\/span><\/a><span style=\"font-weight: 400;\"> plan.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Chapter_13_vs_Chapter_7\"><\/span><b>Chapter 13 vs. Chapter 7<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The critical distinction between Chapter 7 and Chapter 13 is that Chapter 7 is intended to <a href=\"\/videos\/avoiding-the-dangers-of-credit-card-companies\">avoid <b>unsecured debt <\/b>such as credit cards<\/a>, personal loans, and medical bills, whereas Chapter 13 allows you to catch up on secured obligations such as your house or vehicle while also eliminating unsecured debt.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Chapter 7 investigates your financial situation at the time your complaint is filed, safeguards those that are &#8220;exempt&#8221; \u2013 in most cases, everything you possess \u2014 and dismisses the majority, if not all, of your obligations.<\/span><\/p>\n<p><a href=\"https:\/\/thegraftonfirm.com\/debt-resolution-services\/chapter-13\"><span style=\"font-weight: 400;\">Chapter 13<\/span><\/a><span style=\"font-weight: 400;\"> examines your financial situation as of the day your case is filed but focuses more on establishing a <\/span><b>repayment plan<\/b><span style=\"font-weight: 400;\"> for any secured debt (home, vehicle, etc.) that you are behind on while also eliminating the majority, if not all, of your unsecured obligations.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Advantages_of_Using_Chapter_7_Bankruptcy\"><\/span><b>Advantages of Using Chapter 7 Bankruptcy<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Chapter 7 bankruptcy is the most often filed kind of bankruptcy. It&#8217;s a painless way to get rid of most of your debt. Not having to pay it back later lets you start restoring your credit right now. Chapter 7 is suitable for unsecured debtors.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For example, suppose yo<\/span><span style=\"font-weight: 400;\">u have a lot of credit card debt or hefty medical bills that you can&#8217;t pay, Chapter 7 may help you start over.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Chapter_7_Bankruptcy_Drawbacks\"><\/span><b>Chapter 7 Bankruptcy Drawbacks<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Chapter 7 is terrible with secured debt. Chapter 7 won&#8217;t help you if your debt is primarily mortgage, vehicle loans, or other debt. Also, <a href=\"\/bankruptcy\/what-are-dischargeable-debts-in-maryland\">not all unsecured debt can be discharged<\/a> under Chapter 7.<\/span><\/p>\n<p><span style=\"font-weight: 400;\"><a href=\"\/ch7\/declaring-bankruptcy-under-chapter-7-and-the-means-test\">Chapter 7 also includes a means test<\/a>. The <\/span><a href=\"\/bankruptcy\/how-to-qualify-for-chapter-7-means-test\"><b>means test<\/b>&lt;span<\/a> style=&#8221;font-weight: 400;&#8221;&gt; inhibits people who can afford to pay their creditors from doing so. A single family&#8217;s income must be below the state median or have inadequate cash left over to cover basic costs.<\/p>\n<p><span style=\"font-weight: 400;\">The obligation is only discharged when you have taken control of the property. An individual who has mortgage arrears cannot just file Chapter 7 and maintain their house.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">You might use cash from other loan repayments to pay off your mortgage faster. If you are compelled to sell your house, you might be freed from your contract and pay off the remaining dues.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Destroying your credit for ten years is another huge downside of Chapter 7. It&#8217;s worth remembering while you consider your choices.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Chapter_13_Bankruptcy_Disadvantages\"><\/span><b>Chapter 13 Bankruptcy Disadvantages<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">If you&#8217;re <a href=\"\/bankruptcy\/are-bankruptcy-chapter-13-payments-tax-deductible\">considering Chapter 13 bankruptcy<\/a>, there are several drawbacks to consider. To settle debts under Chapter 13 requires up to five years and must be paid from disposable income.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">After paying for needs like food, housing, and medical care, your disposable income is what&#8217;s left after that. That is, your surplus funds will be locked up for the duration of the repayment schedule.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Your <a href=\"\/bankruptcy\/a-guide-on-bankruptcy-filing-in-maryland\">credit may be harmed by a bankruptcy filing<\/a> for some time. It may damage your credit for ten years and cause you to lose all of your credit cards. For those who don&#8217;t already have one, bankruptcy makes getting one difficult.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Also, if you decided to <a href=\"\/ch13\/ch13-bankruptcy-chapter-13-is-it-worth-it\">file for Chapter 13 bankruptcy<\/a> within the previous six years, you will be unable to apply for Chapter 7 bankruptcy.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Keep in mind that you cannot apply for Chapter 13 bankruptcy if you have had a previous Chapter 7 or Chapter 13 case dismissed within the last 180 days for the following reasons:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">You violate a court order, or<\/span><\/li>\n<\/ul>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">You sought dismissal in response to a creditor&#8217;s request for relief from the automatic stay.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Notably, if you got a Chapter 13 discharge in good faith after paying at least 70% of your unsecured obligations, the 6-year prohibition from filing for Chapter 7 bankruptcy does not apply.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">No <a href=\"\/bankruptcy\/what-can-a-baltimore-student-loan-lawyer-do-to-help\">student loan<\/a> debt or alimony, or child support obligations are exempt from the Chapter 13 bankruptcy repayment plan. Even if you declare bankruptcy, you may still be forced to pay specific bills like a mortgage lien.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Choosing_Chapter_13_Bankruptcy_Has_Its_Perks\"><\/span><b>Choosing Chapter 13 Bankruptcy Has Its Perks<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Some benefits outweigh the disadvantages of Chapter 13. Chapter 13 trustees may be more liberal with payment arrangements than in Chapter 7. You may be able to:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">extend your loan repayments,<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">pay less, or<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">abandon a loaned piece of property<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Individual creditors cannot compel you to make full payment until you finish a repayment plan under Chapter 13.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">A Chapter 13 bankruptcy is also a short-term solution to problems like missed payments, defaults, repossessions, and litigation that may wreak havoc on your credit and be challenging to explain to a prospective lender.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Bankruptcy may help you recover your credit faster. The one catch is that you may only file for Chapter 7 once every six years. This means you may file Chapter 13 many times.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Do_the_Right_Thing-_Speak_to_one_of_the_Grafton_Firms_lawyers\"><\/span><strong>Do the Right Thing- Speak to one of the Grafton Firm&#8217;s lawyers.<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Bankruptcy is a very personal matter. The above list should have prepared you to make the best decision for your specific circumstances. One critical point to remember is that Chapter 13 can be a far more effective process for saving your house or another asset, even if you are correctly insolvent, whereas Chapter 7 can cost you money if your income is too high.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">As such, it is vital that you first speak to a qualified <a href=\"\/bankruptcy\/should-i-co-sign-ask-a-baltimore-bankruptcy-lawyer\">bankruptcy lawyer<\/a> in Towson who can provide you with an impartial opinion on your case. The attorneys of the <a href=\"\/about-our-lawyers\">Grafton Firm<\/a> would be more than happy to talk with you about your situation, see your eligibility for any of the bankruptcy protections, and answer any of your questions to help you make an accurate choice on how to proceed. <\/span><a href=\"https:\/\/thegraftonfirm.com\/contact-us\"><span style=\"font-weight: 400;\">Book a free consultation<\/span><\/a><span style=\"font-weight: 400;\"> with us online or call <strong><a href=\"tel:4105050414\">(410) 505-0414<\/a><\/strong>.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Bankruptcy Chapter 7 Vs Chapter 13 \u2013 Which bankruptcy is right for you? When you decide to file bankruptcy has a lot to do with what is going on in your life. Some people have medical bills from a surgery they cannot pay for. Another person may have lost their job and can&#8217;t make ends [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":3207,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[57,58,60],"tags":[],"_links":{"self":[{"href":"https:\/\/thegraftonfirm.com\/wp-json\/wp\/v2\/posts\/3206"}],"collection":[{"href":"https:\/\/thegraftonfirm.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thegraftonfirm.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thegraftonfirm.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/thegraftonfirm.com\/wp-json\/wp\/v2\/comments?post=3206"}],"version-history":[{"count":3,"href":"https:\/\/thegraftonfirm.com\/wp-json\/wp\/v2\/posts\/3206\/revisions"}],"predecessor-version":[{"id":3210,"href":"https:\/\/thegraftonfirm.com\/wp-json\/wp\/v2\/posts\/3206\/revisions\/3210"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/thegraftonfirm.com\/wp-json\/wp\/v2\/media\/3207"}],"wp:attachment":[{"href":"https:\/\/thegraftonfirm.com\/wp-json\/wp\/v2\/media?parent=3206"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thegraftonfirm.com\/wp-json\/wp\/v2\/categories?post=3206"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thegraftonfirm.com\/wp-json\/wp\/v2\/tags?post=3206"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}