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Is Chapter 7 bankruptcy a better fit than Chapter 13?

For many Kentucky residents, making the decision to file for bankruptcy is incredibly difficult. Many have tried to gain control of their finances for years before they give bankruptcy serious consideration. Once they decide to move forward, the next step involves determining whether Chapter 7 bankruptcy or Chapter 13 is a better fit for their needs. 

The primary difference between the two lies in how existing debts are handled. With Chapter 7, many types of unsecured debt are completely eliminated through a process known as discharge. That means that those obligations will no longer exist and do not need to be repaid. 

Chapter 13, on the other hand, is more about redistributing debt than eliminating it altogether. Filers are often able to keep their homes and vehicles but repay those loans and other obligations on a new schedule. That can provide a degree of breathing room and allow the consumer to regain control over debt issues. 

To help make the determination, a filer usually completes a means test, which will evaluate the individual's immediate and projected economic status. Someone who is unemployed or has low income will likely qualify for Chapter 7, while an individual with a good, solid income but who is mired in debt might be a better fit for Chapter 13. Accumulated assets is another factor to consider. 

Regardless of whether an individual in Kentucky qualifies for Chapter 7 or Chapter 13 bankruptcy, he or she will want to sit down with a bankruptcy attorney to discuss his or her options in greater detail. That can help clarify any issues, such as any exemptions that may exist, and address questions or concerns about the process. Bankruptcy can be a great tool for regaining financial stability, and the better informed an individual becomes, the easier it is to make the right decision. 

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Law Office of Ginger C. Cord, PSC
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Lexington, KY 40507

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