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Which is the most appropriate chapter of bankruptcy for you?

The decision to file for bankruptcy often follows months or even years of financial hardship and struggling with debt. If you have reached the point where you acknowledge you need to take legal steps to deal with your debt, it is then necessary to decide which chapter of bankruptcy is the most appropriate for your situation.

New York consumers can most often choose between either Chapter 13 or Chapter 7. Both of these options are similar in that they help an overwhelmed consumer deal with his or her debt, but there are also distinct differences between them as well. It is in your interests to get information about both options, including eligibility, benefits and more.

How do you know what is right for you? 

One of the main factors when deciding which chapter of consumer bankruptcy is right for you is what type of debt you have. For unsecured debt, such as medical debt or credit card debt, Chapter 7 may be an option for you. Consider the following about this particular choice:

  • You may have to give up certain assets, but exemptions may be available that will let you keep some of your important possessions.
  • This option will not discharge child support or student loan debt but can help you deal with other types of debt.
  • Chapter 7 takes less time to complete than Chapter 13. 

Not everyone is eligible for Chapter 7 bankruptcy. If you do not qualify because of your income or there are other reasons why Chapter 7 is not ideal, you may find the following information about Chapter 13 beneficial:

  • You will likely be able to stay in your home and stop the foreclosure process while under Chapter 13 bankruptcy protection.
  • When Chapter 13 is complete, you will still owe whatever balances remain for child support, student loans and other types of debt.
  • You can re-file for Chapter 13 bankruptcy even if you have filed for it in the past.

Filing for bankruptcy can offer you an organized way to deal with your debt and protect you from the efforts of debt collectors. However, this is a significant legal and financial decision. With your future financial interests on the line, it can be helpful to first seek a complete evaluation of your case before you move forward. This can help you understand your options and make the choice that is best for you, and give you the best opportunity for a strong financial future.

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