Choosing A Chapter
A Chapter 7 bankruptcy is a quick way to eliminate most unsecured debts through the liquidation of nonexempt (typically luxury or nonessential living items) property. While most people prefer a fast route to debt relief, Chapter 7 isn’t for everyone. If you have secured debts with an asset you wish to keep, or a priority debt like unpaid taxes, you aren’t likely to benefit from a Chapter 7. Further, not everyone will qualify for a Chapter 7 as they are reserved for those whose income falls below the median threshold of the state.
A Chapter 13 bankruptcy takes longer to complete, usually having your debts resolved in a few years. However, Chapter 13 bankruptcies are open to a wider range of debts like secured and priority debts. Fighting off a foreclosure or resolving priority debts like back taxes are two examples of debts that can be discharged in a Chapter 13, but rarely in a Chapter 7.
Every person has a unique financial situation that makes the risks and benefits of these two chapters different. Before choosing between them consult with a Houston bankruptcy lawyer to discuss your options and best strategy for finding debt relief.