If you are considering filing for bankruptcy but unsure whether Chapter 7 or Chapter 13 is right for you, you are not alone. Many people face this same choice and are under informed about the major differences between the two.
Costs and Duration
Chapter 13 is a repayment-based plan, as opposed to a Chapter 7 liquidation. What this means is that Chapter 13 filers keep more of their property and assets, which they use to repay a portion of their outstanding debts over a three to five year period as determined in the bankruptcy filing process. Thus, Chapter 13 is much more drawn-out than a Chapter 7 liquidation. The filing fees are roughly the same for both, typically amounting to about $300. A bankruptcy lawyer will be helpful in getting the process started.
Chapter 13 Process
Our bankruptcy attorney explains that the Chapter 13 process hinges on eligibility, which can be determined by the amount of debt owed of various types. Your level of debt cannot exceed a certain amount for each type: secured debts cannot be above $1.1 million, and unsecured cannot be above $385,000, as of this writing (the number adjusts automatically for inflation at regular annual intervals). You will have to be able to prove your income level, as part of the process hinges on your ability to make regular payments over the duration of the repayment plan.
A qualified Ft. Myers bankruptcy attorney is your best guide to figuring out whether you will qualify and which type of bankruptcy filing may be right for you.