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When is Chapter 7 Preferable to Chapter 13 Bankruptcy?

A successful Chapter 13 bankruptcy case may offer a desirable path forward to those who are earning income but are unable to keep pace with their debts. It allows debtors to restructure their payment arrangements and satisfy these obligations over an extended period of time. For some, however, this may actually be a disservice. Chapter 13 repayment plans require that a large percentage of your outstanding debts, both secured and unsecured, be ultimately paid back in full.

Filing for Chapter 7 bankruptcy offers a variety of advantages, but requires that the filer qualify by taking the means test, demonstrating that they do not have sufficient disposable income to pay back the debts they have accrued. If you do not meet the qualifications for Chapter 7, it is still possible to file for Chapter 13 bankruptcy.

Chapter 7 Advantages

Filing for Chapter 7 bankruptcy is an advantageous decision for many people. It has the following advantages:

  • You are not required to pay back any portion of your unsecured debts, as all eligible debts will be discharged.
  • You will most likely be able to retain all property which you own.
  • Chapter 7 proceedings move quickly. Most cases are completed in three to six months, whereas Chapter 13 bankruptcy involves a three to five year payment plan.

When you have very limited disposable income and little or no real property, Chapter 7 bankruptcy is an excellent means to discharging most, if not all of your unsecured debt.

Contact Us

If you are interested in filing for Chapter 7 bankruptcy or have questions about what bankruptcy process is right for you, the experienced and knowledgeable bankruptcy lawyers at the Russell Van Beustring P.C., can help. Contact us at 713-973-6650 to learn more.


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