What is the difference between chapter 7 and chapter 13 bankruptcy. Neither chapter is better, they are simply different. It is really a choice between developing a plan to restructure your debt and work through it or to effectively start over.
Ultimately what many people really need is known as a “discharge” – a court order that releases you from some or all of existing indebtedness so you can get back on your feet. Chapter 7 and Chapter 13 are two ways to achieve that goal, but they are two different roads based upon the bankruptcy option that is best in your unique circumstances.
It is important to understand bankruptcy laws provide for “exemptions” that keep some of your assets protected or “safe” during any bankruptcy proceeding. Exemptions often cover tools needed for your profession, your clothes, furniture and other personal possessions, as well as an inexpensive or older car and even a retirement account up to a specified amount. Kentucky even offers an extra “wildcard exemption” that allows you to protect $1,000 worth of what is most important to you. John can and will help you to work through your unique circumstances and identify the best strategy to maximize your exemptions to protect what is important to you.
One primary difference between Chapter 7 and Chapter 13 is based upon the assets you may wish to keep. If you have a home with some equity, a car or other asset(s) you wish to keep a Chapter 13 bankruptcy provides a path to do so. Chapter 13 allows you to keep that property (over and above the exemptions) and work out a payment plan whereby you pay back at least some of your debt, and in exchange you are allowed to keep everything you own. Chapter 13 allows you to keep assets you might otherwise lose if you didn’t consider the protections of bankruptcy.
Chapter 7 is usually the best option for people that don’t have specific assets like a home or car they wish to keep, and for those who may have experienced a change in their situation or reduced levels of disposable or extra income. The Chapter 7 option is best for those who really just need the type of relief they would get from eliminating their debts and making a fresh start. Chapter 7 can actually protect your income and even future income such as a tax refund.
There is a substantial difference between Chapter 7 and Chapter 13 bankruptcy options. This is why it is important to speak with attorney John Schmidt. John has served your neighbors and the people of Kentucky for more than two decades. The Law Office of John Schmidt & Associates PLLC can help you work through these challenges and protect what is most important to you. We invite you to contact us via e-mail, schedule an appointment or call us today at (502) 509-1490 to get the answers you need and relief from financial challenges and creditors.