Should You File Chapter 13 OR Chapter 7 Bankruptcy?

This is something that I explore with every potential client on their initial free consultation visit to my office. Everyone's situation is different and there are many reasons why I might recommend a potential client file one chapter over another. For instance, if someone is trying to protect equity in an asset such as a home, car or cash, I may advise a chapter 13 bankruptcy. If a potential client is trying to save their home from foreclosure or their car from repossession I may also recommend chapter 13. On the other hand, there are various reasons why I may recommend a chapter 7 bankruptcy. Some reasons where I might recommend a chapter 7 include a scenario where someone has no assets and all of the problem debts are unsecured with no liens. Another situation may be a potential client who does not have enough income to fund a chapter 13 payment plan but needs immediate relief from debt and creditors. These reasons are all fairly logical; however, there are some less obvious, but very valid reasons to consider a chapter 13 even if you think you are a perfect candidate for chapter 7.

Frankly, I could not elaborate on this subject any better than my colleague, attorney Cathy Moran, who practices in Northern California. She recently posted a fabulous article on her website and I would not be able to discuss it any better than Cathy.  Here is what Cathy has to say about the “best” chapter of Bankruptcy

"The uncertainty of the future is hands down the best reason to file Chapter 13 even if Chapter 7 provides equal relief today.

If tomorrow brings job loss or big medical bills, choosing Chapter 13 increases a family’s options for those new money troubles.

Get a Chapter 7 discharge and you are barred from a further discharge for at least four years. 

Get a Chapter 13 discharge, and you can file a new Chapter 13 within two years of the filing of the previous Chapter 13.

That usually means that you are eligible to file a new Chapter 13 before the minimum duration of a repayment plan has run.  (This doesn’t mean that you can have two Chapter 13 cases running simultaneously; it means that the statutory time intervals found in the bankruptcy code don’t lock you out of a new 13).

The choice of Chapter 13, then, keeps your options open should financial disaster strike again."

The attorneys here at Bond and Botes wholeheartedly agree with Cathy’s words. We like to look at each client’s individual situation to help you determine what chapter of bankruptcy is right for you. If you are struggling with debt and need assistance contact our nearest office and set up an appointment for a free consultation with one of our attorneys to discuss all of your options.