Choosing Between Chapter 7 And Chapter 13

At J G Moody Law PLLC, we help people overcome their debt and regain control of their lives, through personal bankruptcy, debt consolidation and other means.

The two most important types of personal bankruptcy under the U.S. Bankruptcy Code are called Chapter 7 and Chapter 13. When you file for either type of bankruptcy, the court will automatically issue a stay on any collection actions against you. This means you will be protected from aggressive debt collectors.

However, each type has its own eligibility requirements, advantages and disadvantages. If you are struggling with debt and considering bankruptcy, it's important to know the differences between the two types.

Chapter 7

Chapter 7 bankruptcy is the fastest and most effective means of eliminating personal debt. Those who are eligible for Chapter 7 and fulfill its requirements can see most of their debts wiped out within a few months.

Those who file for Chapter 7 bankruptcy protection must qualify under a means test. Essentially, this means the filer's income must have been equal or less than the state median for the previous six months.

Under Chapter 7, filers must sell off some of their assets in order to pay off their creditors. For this reason, Chapter 7 is sometimes known as liquidation bankruptcy. However, there are many exemptions to the liquidation requirement. You will typically be able to keep a car, your pension, household items and more.

Some types of debt are not dischargeable in a Chapter 7 bankruptcy. If you come to us for help with debt relief, our attorney can help you understand how Chapter 7 would apply to your unique circumstances.

Chapter 13

Chapter 13 is often the right choice for people whose debts exceed their income. Under Chapter 13, you will develop a plan to repay your debts within three to five years. If you keep to the terms of the plan, at the end of that period the court will discharge much, if not all, of any remaining debt.

Perhaps the main advantage Chapter 13 has over Chapter 7 is that it does not require you to liquidate your assets. The main disadvantage is that it takes longer than Chapter 7 to complete.

Get Started

The sooner you get started overcoming your debt, the better. For the help of an experienced lawyer, contact J G Moody Law PLLC today by calling us at 385-625-2385 or sending us an email. We offer an initial consultation at no charge.

J G Moody Law PLLC has offices in Orem, Utah, and represents clients in surrounding communities such as Provo.

J G Moody Law PLLC is a debt relief agent. We help people file for bankruptcy under the U.S. Bankruptcy Code.