Many Louisiana residents have problems with debt, and many cannot foreseeably pay it off. After exhausting other options, bankruptcy might be the way to go. Comparing Chapter 7 and Chapter 13 bankruptcy can help determine which is best for you.
Understanding Chapter 7 bankruptcy
Chapter 7 bankruptcy is a good option if you have limited finances and no way to pay back debt to your creditors. In order to qualify, you must pass a means test, which measures your income. If you have little to no income and little to no assets, you can file for Chapter 7 and don’t have to pay back most of your unsecured creditors. However, a trustee is assigned to your case so that any non-exempt assets that carry a value can be sold and the proceeds used to pay down your debt.
Explaining Chapter 13 bankruptcy
Chapter 13 bankruptcy is available for consumers who have too much money to qualify for the means test and Chapter 7. It’s designed for individuals who have a steady source of income and are able to repay at least some of their debt but need more time to do so. With this option, you’re able to repay your creditors over a period of three to five years. You can keep your assets and continue making payments toward debts such as your mortgage and car loan.
Knowing which is for you
If you qualify for Chapter 7 bankruptcy, it can help you retain your exempt assets.
However, if your income bracket is higher and you’ve fallen behind on certain payments and want to keep your property, it makes sense to file for Chapter 13 bankruptcy. You can repay your debts over a longer time and work on repairing your credit at the same time.
Whichever type of bankruptcy you choose, it can help you eliminate some of your debt and obtain some relief.