Chapter 7 or Chapter 13? Which Option is Better?

by Josh Levy 9. June 2011 14:43

A recent article in the Wall Street Journal discussed several recent studies as to who files Chapter 7 and who file Chapter 13.  This article is located at:http://blogs.wsj.com/bankruptcy/2011/05/12/studies-find-racial-discrepancy-in-chapter-13-filings/?blog_id=108&post_id=17307

Among the issues discussed in this article were some possible racial disparities in who files Chapter 7 or Chapter 13, and the difference in the attorney fees charged in the Cahpter 7 and Chapter 13.  There are reasons why an individual shold file for Chapter 7 relief as compared to Chapter 13 relief.

First, Chapter 13 should only be the primary option in several situations:

(1)  you are behind on your mortgage payments and want to cure the arrears over time (stop foreclosure)

(2)  you are behind on your car payments and want to prevent a repossession and possibly restrucutre the terms of the car loan

(3)  payment of certain taxes that cannot be discharged

(4)  you are not eligible to file Chapter 7

If you do not meet one of these conditions, you should always consider Chapter 7 as a primary option.  It will cost more in "up front" fees to file Chapter 7 than Chapter 13, but you will not be committing to a 3 to five year repayment plan as usually required in Chapter 13.  Filing Chapter 13 can be an option if it is not possible to pay the Chapter 7 fees, but it is not the preferred alternative.

To schedule an appointment to discuss a potential bankruptcy filing, please contact Levy Law Offices at (919) 846-0125 or via e-mail at josh.levy@jnl-law.com.

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