Choosing Between Chapter 7 and Chapter 13 Bankruptcy: Which Is Right for You?

Many times when I meet with a client, they have no idea whether they need a Chapter 7 or a Chapter 13 case. The concepts between the two can confuse even a seasoned lawyer, so there is no doubt that many consumers feel overwhelmed when looking at their options. Chapter 7 cases, known to some as “straight bankruptcy” requires qualification under a Mean’s Test, which looks at income and expenses and determines if there is enough excess funds to pay some or all of the unsecured debt. This is only one of the issues that an attorney must look to in determining the best option. Equity which exists in real property and personal property can sometimes be exempted under state or federal exemptions but if not properly exempted, this property can become subject to liquidation by a Chapter 7 trustee.

In cases where too much equity exists, a Chapter 13 case is a good option. Chapter 13 cases are used, many times, to stop a foreclosure, garnishment or repossession. Often, a client will tell me that they do not feel they are able to pay all of their debts in a Chapter 13 case. A skilled attorney, who is well versed in bankruptcy law, can craft a plan that pays less that 100% of unsecured debt and fits within a client’s budget.

If you need help getting your finances in order, call us today at Greenway Bankruptcy Law 205-324-4000 located centrally in Birmingham, Alabama.