If you're desperate for debt relief, you might turn to bankruptcy. After all, bankruptcy can help you find a way out of debt. However, people use two main branches when they need relief: Chapter 7 and Chapter 13. But which is right for you? Keep reading this guide to determine how to choose the right branch for your situation.
Your income plays a role in the branch you use for debt relief in several ways. First, you might not be able to use Chapter 7, as you must meet income thresholds. An attorney can explain how this works. However, you can't use Chapter 13 unless you have enough income. As a result, a lawyer will begin a consultation visit by examining your income, as it affects your eligibility. Typically, low earners use Chapter 7, while high earners use Chapter 13. However, other factors also matter.
Another factor that matters is your debt. Before visiting a bankruptcy lawyer, make a list of your debts. You should include the creditor, debt type, and amount. Your debt affects the decision, as both branches view and treat debt differently. For example, people with high credit card balances generally benefit more from Chapter 7. However, people with secured debt issues tend to benefit more from Chapter 13. An attorney can recommend the best branch by reviewing all of your debts.
In addition, other factors also affect the decision. Therefore, an attorney will ask about other things, starting with your home. For example, they might ask if you're behind on your house payments. If so, using Chapter 7 might not be the best answer, even if you qualify for it. Chapter 7 can't stop a person from losing their home, but Chapter 13 can. Chapter 13 is the best option for anyone facing foreclosure or worried about falling behind on their payments.
Additionally, do you have a lot of assets? If so, you risk losing them in a Chapter 7 case. You won't lose them if you use Chapter 13, as this branch doesn't require surrendering assets.
Talk to a bankruptcy attorney
After reading this, you might know which branch seems right for you. However, without speaking to a bankruptcy attorney, you can't know for sure. So contact a local bankruptcy law firm to schedule a free consultation appointment, as this will help you determine the best choice for your situation.