Should I file Chapter 7 or Chapter 13?
For anyone contemplating bankruptcy, the choice of chapters ranks amongst the most important decisions in the bankruptcy process. Which is best is a complex question that involves applying the particulars of a person's financial situation to multiple bankruptcy laws and procedures. At Fabricius & Fabricius, we answer this question for a prospective bankruptcy filer only after our bankruptcy attorney has a conversation with the individual to learn about their priorities and objectives. While there are certainly clear cases for one chapter or the other, many cases come down to which aspects of bankruptcy relief are most important to the filer.
Speaking generally, the following often weigh towards chapter 7 bankruptcy:
- Irregular or uncertain future income
- Absence of assets beyond property allowances
- Desire for quick completion of bankruptcy proceeding
On the other hand, the following weigh towards a chapter 13 bankruptcy:
- Presence of a mortgage default on a home the debtor wishes to keep
- Second mortgages where the amount owed on the first mortgage exceeds the value of the property
- Ownership of property that debtor wishes to keep that would be sold in chapter 7
- Certain older car loans where value of the car is less than the loan
- Car loans with few large payments remaining
- Concern about how a chapter 7 trustee will view an unusual asset
- Some tax and alimony situations