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
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This question-and-answer post is made available for educational and informational purposes only and to promote a general understanding of the law, and not to provide specific legal advice. In order to provide a concise response, the author must make certain assumptions about the ordinariness of the situation underlying the question posed, assumptions which may not apply to your real circumstances. Use of this site does not create an attorney-client relationship. Reading this post is not a substitute for obtaining legal advice based on the unique facts of your situation from an attorney licensed to practice law in your state. No representation is made regarding the currentness of the information contained in this post. Examples that may be provided in this post are merely for illustrative purposes; the results in your case may be different and no results are guaranteed.