Chapter 7 or Chapter 13 Bankruptcy: Choosing the Best Fit for Your Financial Situation
Good morning, this is Edward Kelley, your bankruptcy attorney, with another 3 Minutes to Financial Freedom. We’ve talked this week about Chapter 7, what that is and how it works, and Chapter 13. Today we’re going to talk about which one should I do. Which is the right chapter for me?
Well, as I’ve said in both videos previously, Chapter 7 is what you want to do if you can. That’s 90 days in and out, done, assuming your property is protected, you don’t lose anything and your debts go away, depending on what they are. We’re going to get into specifics on those issues in other videos.
Factors to Consider: Chapter 7
Chapter 13 means you pay what you can, not what you owe, but what you have left, disposable income based on national standards, or it can allow you to save your house or save your car as long as you pay in the value of what they’re worth over the lifetime of the plan. So that’s again a 7 versus a 13. So what should you do?
Well, if you’re in foreclosure trying to save your house, a car’s about to get repossessed but you want to keep it, you’re going to have to do a 13. If it’s just a simple case of what’s your income, then we’re going to go by household income based on IRS standards.
Determining Eligibility: Chapter 7 vs. Chapter 13
For example, at the moment, for a household of 1, the cutoff to be able to do a Chapter 7 is about $55,000, and you can add $9,000 to $10,000, I think it’s $9,500 for each additional member over that. So a pretty easy math, household of 2, $65,000, 3, $75,000, et cetera, et cetera. If you’re under that, no problem, you can do a 7.
Even if you’re over that, if your expenses will bring you down to the point that you can still qualify, then you can still do the 7. If you’re over that, you may need to do a 13. So that’s the long and short of is a 7 or a 13 right for me?
Schedule Your Initial Strategy Session Today
If you are unsure whether Chapter 7 or Chapter 13 is the right choice for you, contact a OKC bankruptcy lawyer at 405-563-7888 to schedule a low-cost initial strategy session. Let us help you on the path to financial freedom. Contact us today!