You have several choices when considering filing for bankruptcy. The bankruptcy code provides both consumers and businesses with options. Many consumers choose either Chapter 13 or Chapter 7, however. Both provide filers with some much-needed debt relief and help them make a fresh financial beginning. To find out which one might be best for your situation, read below.

Chapter 13: Debts Reorganized

This form of bankruptcy offers filers a way to cut down on the monthly debt load, eliminate penalties, and stretch out the repayment process. The reorganization involves several facets with a Chapter 13 case being made up of the following actions:

1. Stop bill collection actions like collections contact, foreclosures, repossessions, wage garnishments, and property liens.
2. Ordering creditors to stop charging certain penalties, fees, etc.
3. Lowering the minimum monthly payment amounts.
4. Agreeing to drop past late fee charges, lower interest rates, etc.
5. In some cases, agreeing to accept less than the total amount due.

Chapter 13 is good for those who want to pay their debt obligations but need an easy way to do it. It's also great for those who make too much money to file Chapter 7 since Chapter 13 has no income restrictions. Chapter 13 reorganization plans can take several years to be complete.

Chapter 7: Assets May be Liquidated

Many filers use Chapter 7 rather than Chapter 13 because of the dramatic way it eliminates debts. It's a lot faster than Chapter 13, too. In most cases, filers can have a completed bankruptcy action in as little as six months from start to finish. That time period may be slightly longer than usual, however, due to the COVID-19 court backlog. Nearly every type of consumer debt can be included in a Chapter 7 filing. That is not to say that all debt can be discharged, however. Some debts like newer tax debts, legal obligations (the filer lost a court judgment not having to do with financial issues), back child support, student loans, and more are unable to be discharged. However, it does get rid of all credit card, personal, and medical debts, and that may be quite a bit of relief for most consumers.

As to the liquidation issue, most filers don't lose assets when they file because they are protected by state exemptions. If you own a lot of property, expensive vehicles, second homes, art, jewelry, etc., speak to your bankruptcy lawyer about what you could lose through a Chapter 7 filing.

You have nothing to lose by speaking to a bankruptcy lawyer about your debt situation and finding out which form of bankruptcy works for you. Speak to a lawyer and get the debt relief you need today.