What are the two types of consumer bankruptcy?

When an individual is struggling to pay bills, they may be unsure of what to do and how to get out of overwhelming debt. When faced with overwhelming debt, one option that you may want to consider is to assess your bankruptcy options. There are two types of consumer bankruptcy that an individual may want to consider.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy is a great option for individuals who don’t have enough income to feasibly pay back their debts. In a chapter 7 bankruptcy, individuals will have to get rid of some of their assets in an effort to pay back some debt. This is also called a liquidation bankruptcy. In order to determine if you qualify for a chapter 7 bankruptcy, you must take a means test that aims to figure out if your income exceeds Chapter 7 standards.

Chapter 13 Bankruptcy

When individuals have an income that exceeds the means test, they may file for a Chapter 13 bankruptcy. Chapter 13 allows debtors to keep all of their property but they will be subject to repayment of debt over a 3 to 5 year period. Any debt that is not repaid after that time period will be forgiven.

If you have questions about what type of bankruptcy is right for you, it is important to contact an experienced bankruptcy attorney who can help you get started.

Before taking action, it is important to discuss your legal matter with an experienced attorney. Contact The Radol Law Firm to discuss any divorce and family law matters you may be faced with.