Is Chapter 13 Bankruptcy Right for You?

Very soon after making the decision to file for bankruptcy, you must decide which type of bankruptcy you would like to file. In some cases, this may seem like a no-brainer; people with no income or those in massive debt should file a Chapter 7. For those who are in less dire situations, however, it is much less clear-cut. Fortunately, with some important information and discussion with your affordable bankruptcy attorney in Salt Lake, you can make an informed decision that will ultimately benefit you.

What Is the Difference?

Chapter 7 bankruptcy is the one most people think of when they think of bankruptcy. It involves liquidating one’s assets in exchange for erasing all or most of one’s debt. It is less fiddly than a Chapter 13, but also leaves the filer with few assets. Chapter 13, on the other hand, is closer to debt consolidation than debt erasure; based on the amount of disposable income you have, a monthly payment is calculated and you must pay that amount to a trustee every month until you have completely paid off your debt or five years have passed. You get to keep your assets and are not required to pay anything more than you can afford.

What Is Your Income?

Is your income more or less stable? Do you have an average- to well-paying job, but too much debt or too many creditors to afford? Do you have enough to live on, but not enough disposable income to pay your creditors? Do you have a home that is about to foreclose, but you think you might be able to pay it off if only you had more time? Chapter 13 is most likely your best option. If you have no income or unstable income, you may want to consider a Chapter 7.

Do You Have Assets?

In a legal setting, an asset is something that has some monetary value. This can be anything from a gift card to a house. If you own a house that has equity, you should definitely consider filing a Chapter 13. If you have a necessary vehicle that is worth a decent amount, you should consider a 13. Many clients who file Chapter 13 bankruptcies have families to support, and cannot afford to lose their equity-filled homes. If none of these things apply to you, or none of your “assets” have any real value, you may want to consider a 7; otherwise, Chapter 13 is probably right for you.

If you have additional questions about filing for Chapter 13 Bankruptcy in Utah, please call us at 801-981-4548 and set up your free bankruptcy consultation today.

"I was worried I would lose everything. Brian helped me sort things out and restored my life. I don't know where I'd be without him!"

-Sue H. Ogden, UT