If you are starting the bankruptcy process, you likely are trying to figure out if you should use Chapter 7 or Chapter 13 to file for bankruptcy. While both can be advantageous in their own ways, here is why you'll want to pick Chapter 7 bankruptcy instead of Chapter 13 if you have the option.
Chapter 7 Offers a Faster Fresh Start
When you compare the two forms of bankruptcy, know that your debts will not be discharged with Chapter 13 until you complete the repayment plan.
It's easy to get into debt, but it can be extremely hard to get out of debt. With credit cards especially, it can be very easy to buy, buy, buy without a care of how to pay it back. When those credit cards get maxed out though, you're going to be in a heap of trouble if you can't pay it back. It can take a long time to pay back a maxed credit card, even if it doesn't have a high limit.
It can come as a surprise when you notice how interested the bankruptcy courts and the trustee seems to be in your income tax situation. The interest mostly lies in the way that all government agencies are interconnected and share information. There are a few other reasons for the interest, however, so read on to learn more.
Do You Owe Uncle Sam?
Filing for chapter 7 – Tax debts can be crippling to those already in trouble with their finances.
While bankruptcy is truly a last resort, it can also be the light at the end of the tunnel that provides a path out of crippling debt. The effects of bankruptcy are harsh, but they can often be preferable to the overwhelming financial and psychological toll of long-term debt. Unfortunately, filing for bankruptcy is not necessary a simple process. One of the first steps is simply deciding whether to file for Chapter 13 or Chapter 7 bankruptcy, each of which has its own advantages, potential pitfalls, and path to recovery.
Whether you already know for sure you are going to meet with a lawyer to file for bankruptcy or even if you are simply considering it, there are many things you should avoid doing to keep your future self out of hot water. As with most legal matters, bankruptcy law is complicated and there are many rules you may not be aware of that you could inadvertently violate and make your case more challenging.
