Chapter 7 vs. Chapter 13 Bankruptcy

The decision to file bankruptcy is a big choice .  Your ability to decide which type of bankruptcy to go after is a very important part of that decision .  Do you know the difference between Chapter 7 bankruptcy and Chapter 13 bankruptcy ?  Read this basic information , then go ask a bankruptcy lawyer in Minneapolis to help you decide which form of bankruptcy best suits you .

The Biggest Difference between Chapter 7 and Chapter 13

By making a filing for Minnesota Chapter 7 bankruptcy , you are petitioning the courts to erase most or all of your debts .  If you own property that is not exempt , those belongings could be taken by your trustee , put up for sale , and any profit would be used to pay your debts .  This situation is the exception rather than the rule , however, because the majority of people filing for chapter 7 do not own many unnecessary belongings .

If you choose Chapter 13 bankruptcy , you and your lawyer will work with your trustee and the court to create a repayment plan designed to cover all or some of your debt, with payments spread over a specified period of time.  The payment amount may change based on your current income , the types of debt you owe, and how much property you own .  You will not have your property siezed when filing Chapter 13 bankruptcy .

Which Type of Bankruptcy is Right for You?

Before the bankruptcy laws were changed , anyone could choose to between chapter 7 and chapter 13 .  The majority of people opted to file for Chapter 7 bankruptcy because, in most cases , it eliminated almost all of their debts.  However, now your income level is the deciding factor for determining if you are eligible to file Chapter 7.  Most people who is considering Chapter 7 are required to take a "means" test.  The test determines whether or not the income you earned during the last six months prior to your filing was above or below the state average income for a household your size.  If it was under , you will probably be eligible to file Chapter 7 .  However, if it is higher than the average , you will be required to file for Chapter 13 bankruptcy protection.

Either form of bankruptcy is a permanent solution for a rough problem.  A bankruptcy lawyer will be the person most qualified to help you decide if bankruptcy is the right move for you and, if so, which form of bankruptcy will be best for you .  Don't be nervous about contacting a lawyer to see if bankruptcy is a sensible solution to your financial problems.