{"id":3567,"date":"2021-02-02T09:53:31","date_gmt":"2021-02-02T09:53:31","guid":{"rendered":"https:\/\/phoenixfreshstartbankruptcy.com\/?p=3567"},"modified":"2022-04-29T08:58:32","modified_gmt":"2022-04-29T08:58:32","slug":"bankruptcy-chapters-7-and-13-the-pros-and-the-cons","status":"publish","type":"post","link":"https:\/\/phoenixfreshstartbankruptcy.com\/bankruptcy-chapters-7-and-13-the-pros-and-the-cons\/","title":{"rendered":"Bankruptcy Chapters 7 and 13: The Pros and the Cons"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">This pandemic has placed most Americans in financial hardship. Bankruptcy protection can help you manage your debts and get your life back on track.\u00a0 Declaring bankruptcy is nothing to be ashamed of, in fact, it gives you another chance to move forward with life. Here we give a rundown of the two common types of bankruptcy and list their advantages and disadvantages.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Chapter_Seven_Bankruptcy\"><\/span><b>Chapter Seven Bankruptcy<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2><div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<label for=\"ez-toc-cssicon-toggle-item-662db0fa9c993\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-662db0fa9c993\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/phoenixfreshstartbankruptcy.com\/bankruptcy-chapters-7-and-13-the-pros-and-the-cons\/#Chapter_Seven_Bankruptcy\" title=\"Chapter Seven Bankruptcy\">Chapter Seven Bankruptcy<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/phoenixfreshstartbankruptcy.com\/bankruptcy-chapters-7-and-13-the-pros-and-the-cons\/#Pros\" title=\"Pros\">Pros<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/phoenixfreshstartbankruptcy.com\/bankruptcy-chapters-7-and-13-the-pros-and-the-cons\/#Cons\" title=\"Cons\">Cons<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/phoenixfreshstartbankruptcy.com\/bankruptcy-chapters-7-and-13-the-pros-and-the-cons\/#Chapter_Thirteen_Bankruptcy\" title=\"Chapter Thirteen Bankruptcy\">Chapter Thirteen Bankruptcy<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/phoenixfreshstartbankruptcy.com\/bankruptcy-chapters-7-and-13-the-pros-and-the-cons\/#Pros-2\" title=\"Pros\">Pros<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/phoenixfreshstartbankruptcy.com\/bankruptcy-chapters-7-and-13-the-pros-and-the-cons\/#Cons-2\" title=\"Cons\">Cons<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n\n<p><span style=\"font-weight: 400;\"><a href=\"https:\/\/phoenixfreshstartbankruptcy.com\/chapter-7\/\"><strong>Chapter 7 bankruptcy<\/strong><\/a> is also known as liquidation bankruptcy. A trustee sells or \u201cliquidates\u201d your <a href=\"\/nonexempt-property-in-bankruptcy\/\">nonexempt property<\/a> for the benefit of your creditors. Exempt property is possession considered as a necessity for living and working.\u00a0<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Pros\"><\/span><span style=\"font-weight: 400;\">Pros<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><strong><i>Relatively speedy discharge<\/i><\/strong><\/p>\n<p><span style=\"font-weight: 400;\">After filing the petition, you can eliminate all unsecured debts within 4-6 months.<\/span><\/p>\n<p><strong><i>No deficiencies<\/i><\/strong><\/p>\n<p><span style=\"font-weight: 400;\">A lender can sell your property through repossession or foreclosure. If the sale doesn\u2019t pay off the amount owed, the remainder is called a deficiency. Bankruptcy discharges deficiency judgments.\u00a0<\/span><\/p>\n<p><strong><i>Stop and prevent lawsuits<\/i><\/strong><\/p>\n<p><span style=\"font-weight: 400;\">Filing bankruptcy under Chapter 7 stops any lawsuit. If what the debtor owes is dischargeable, the lawsuit can\u2019t continue and the debtor can eliminate the debt. This bankruptcy chapter also removes judgments for any dischargeable debt incurred.\u00a0<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Cons\"><\/span><span style=\"font-weight: 400;\">Cons<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><strong><i>Income Requirements<\/i><\/strong><\/p>\n<p><span style=\"font-weight: 400;\">Your income must be below the median income in the state to qualify for Chapter 7. This is calculated with the bankruptcy means test.\u00a0<\/span><\/p>\n<p><strong><i>Potentially lose property<\/i><\/strong><\/p>\n<p><span style=\"font-weight: 400;\">Property not protected by bankruptcy exemptions may be sold by the bankruptcy trustee to pay off creditors<\/span><\/p>\n<p><strong><i>Negative credit impact<\/i><\/strong><\/p>\n<p><span style=\"font-weight: 400;\">Your credit report will show in the public record of bankruptcy for 10 years and your credit score will be negatively affected.\u00a0<\/span><\/p>\n<p><strong><i>Non-dischargeable debt<\/i><\/strong><\/p>\n<p><span style=\"font-weight: 400;\">Some debts are not eligible for bankruptcy discharge. These include taxes, child support, restitution, student loan debt, alimony, some judgments, and most government debt, among others.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Chapter_Thirteen_Bankruptcy\"><\/span><b>Chapter Thirteen Bankruptcy<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\"><a href=\"https:\/\/phoenixfreshstartbankruptcy.com\/chapter-13\/\"><strong>\u00a0<img decoding=\"async\" class=\"alignright size-full wp-image-3569\" src=\"https:\/\/phoenixfreshstartbankruptcy.com\/wp-content\/uploads\/2021\/02\/Bankruptcy-Chapters-7-13.jpg\" alt=\"Bankruptcy Chapters 7 and 13\" width=\"338\" height=\"338\" srcset=\"https:\/\/phoenixfreshstartbankruptcy.com\/wp-content\/uploads\/2021\/02\/Bankruptcy-Chapters-7-13-66x66.jpg 66w, https:\/\/phoenixfreshstartbankruptcy.com\/wp-content\/uploads\/2021\/02\/Bankruptcy-Chapters-7-13-100x100.jpg 100w, https:\/\/phoenixfreshstartbankruptcy.com\/wp-content\/uploads\/2021\/02\/Bankruptcy-Chapters-7-13-150x150.jpg 150w, https:\/\/phoenixfreshstartbankruptcy.com\/wp-content\/uploads\/2021\/02\/Bankruptcy-Chapters-7-13-200x200.jpg 200w, https:\/\/phoenixfreshstartbankruptcy.com\/wp-content\/uploads\/2021\/02\/Bankruptcy-Chapters-7-13-300x300.jpg 300w, https:\/\/phoenixfreshstartbankruptcy.com\/wp-content\/uploads\/2021\/02\/Bankruptcy-Chapters-7-13.jpg 338w\" sizes=\"(max-width: 338px) 100vw, 338px\" \/>Chapter 13 bankruptcy<\/strong><\/a> is also called a wage earner\u2019s plan. When you declare bankruptcy under Chapter 13, you propose a repayment plan to creditors, then pay the debt off in installments over 3-5 years. After you pay off your plan, the remaining debt will be discharged. A creditor can\u2019t proceed with any involuntary collection effort.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Pros-2\"><\/span><span style=\"font-weight: 400;\">Pros<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><strong><i>Get rid of unsecured debt<\/i><\/strong><\/p>\n<p><span style=\"font-weight: 400;\">These include medical bills, credit card debt, and personal loans, among others. These can be eliminated if you pay a small amount through your repayment plan.<\/span><\/p>\n<p><strong><i>Help with tax debt<\/i><\/strong><\/p>\n<p><span style=\"font-weight: 400;\">Income tax debt usually can\u2019t be discharged in a bankruptcy. But if certain requirements are met, some of your income tax debt will be considered nonpriority and can be eliminated much like other unsecured debt.<\/span><\/p>\n<p><strong><i>Save your home from foreclosure<\/i><\/strong><\/p>\n<p><span style=\"font-weight: 400;\">An automatic stay under Chapter 13 stops any foreclosure sale. The repayment plan lets you manage your past-due mortgage<\/span><\/p>\n<p><strong><i>Help with the second mortgage<\/i><\/strong><\/p>\n<p><span style=\"font-weight: 400;\">If you owed more on your first mortgage than the fair market value of your house, your second mortgage lender would not receive anything from the foreclosure because there would be nothing left over after paying the first. If the lender won&#8217;t get any money at a sale, your second mortgage is considered as unsecured debt and can be wiped out through a Chapter 13 bankruptcy.<\/span><\/p>\n<p><strong><i>Help with car payments<\/i><\/strong><\/p>\n<p><span style=\"font-weight: 400;\">Chapter 13 can help you avoid repossession. If you owe more than what your car is worth and have owned it for at least 910 days before bankruptcy filings, you might be able to lower your car payments.\u00a0<\/span><\/p>\n<p><strong><i>Help with domestic support payments<\/i><\/strong><\/p>\n<p><span style=\"font-weight: 400;\">You can add domestic support obligations, alimony, and child support to your Chapter 13 plan. Once you reorganize your payments, you can avoid jail time and other court cases.\u00a0<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Cons-2\"><\/span><span style=\"font-weight: 400;\">Cons<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><strong><i>Negative credit impact<\/i><\/strong><\/p>\n<p><span style=\"font-weight: 400;\">You could lose an estimate of 100-200 points. However, it\u2019s only on record for 7 years, unlike in Chapter 7 where it would be on record for 10 years.<\/span><\/p>\n<p><strong><i>Length of time<\/i><\/strong><\/p>\n<p><span style=\"font-weight: 400;\">A case often lasts 3-5 years before it\u2019s paid in full. Some might negotiate a debt settlement, debt consolidation, or other forms of debt relief as an alternative to bankruptcy.<\/span><\/p>\n<p><strong><i>Low payment flexibility<\/i><\/strong><\/p>\n<p><span style=\"font-weight: 400;\">You must use all your disposable income to repay your debt. You can\u2019t borrow at the payment plan period without approval from the bankruptcy court. And if you get a pay raise or any income increase, then the installments amounts could increase, too.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">If you\u2019re unsure which bankruptcy type to file for, it\u2019s best to talk to an experienced <a href=\"https:\/\/phoenixfreshstartbankruptcy.com\/\"><strong>bankruptcy attorney<\/strong><\/a>. At <strong>Phoenix Fresh Start Bankruptcy Attorneys<\/strong>, we can discuss your options with you and help you get back on track to financial success. Call us today to schedule a free consultation!<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>This pandemic has placed most Americans in financial hardship. Bankruptcy protection can help you manage your debts and get your life back on track.\u00a0 Declaring bankruptcy is nothing to be ashamed of, in fact, it gives you another chance to move forward with life. Here we give a rundown of the two common types of bankruptcy and list their advantages and disadvantages. Chapter Seven Bankruptcy Chapter 7 bankruptcy is also known as liquidation bankruptcy. A trustee sells or \u201cliquidates\u201d your [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":3568,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[35],"tags":[],"_links":{"self":[{"href":"https:\/\/phoenixfreshstartbankruptcy.com\/wp-json\/wp\/v2\/posts\/3567"}],"collection":[{"href":"https:\/\/phoenixfreshstartbankruptcy.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/phoenixfreshstartbankruptcy.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/phoenixfreshstartbankruptcy.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/phoenixfreshstartbankruptcy.com\/wp-json\/wp\/v2\/comments?post=3567"}],"version-history":[{"count":1,"href":"https:\/\/phoenixfreshstartbankruptcy.com\/wp-json\/wp\/v2\/posts\/3567\/revisions"}],"predecessor-version":[{"id":4277,"href":"https:\/\/phoenixfreshstartbankruptcy.com\/wp-json\/wp\/v2\/posts\/3567\/revisions\/4277"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/phoenixfreshstartbankruptcy.com\/wp-json\/wp\/v2\/media\/3568"}],"wp:attachment":[{"href":"https:\/\/phoenixfreshstartbankruptcy.com\/wp-json\/wp\/v2\/media?parent=3567"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/phoenixfreshstartbankruptcy.com\/wp-json\/wp\/v2\/categories?post=3567"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/phoenixfreshstartbankruptcy.com\/wp-json\/wp\/v2\/tags?post=3567"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}