For most debtors, they have often have a choice in either filing for Chapter 13 bankruptcy or Chapter 7 bankruptcy. Understandably they want to know which option is better suited for them. The answer is that it depends. Most of my Chapter 7 clients either are current on their mortgage and car loans or they have made a decision to surrender their car or home back to the lender. In addition, the Chapter 7 clients usually do not have any assets above the SC exemption guidelines (prior blogs on exemptions). Finally, Chapter 7 clients usually have income that is within the Federal guidelines for a family their size.
For Chapter 13 clients, they have multiple reasons for wanting to choose this option. A significant portion of Chapter 13 bankruptcy filers choose this path because they are behind on their house or car loan and they want to keep it. Unlike Chapter 7 bankruptcy, Chapter 13 bankruptcy has a plan that can be filed with the Court to save the home and or car. The Chapter 13 Plan usually requires that the arrearages on the home be paid in full over a 3-5 year period. Car loans are usually paid in full at 5.25% over the same period. Please note there are exceptions to both of these general rules.
Another reason for filing a Chapter 13 bankruptcy is because the individual has too many assets or the income is too high. In either case, the person could pay a percentage of their debts in a Chapter 13 plan without losing any of the assets. The percentage of the unsecured debts to be paid back depends on multiple factors to include the income and amounts of assets.
Please note there are many more benefits and reasons for filing either a Chapter 7 or Chapter 13 bankruptcy to include issues such as tax debts, child support, finance loans, business debts, and many more issues. If you are wanting more information about either Chapter 7 or Chapter 13 bankruptcy, please feel free to call me concerning a free consultation to discuss your options.
If you live in South Carolina and wish to explore bankruptcy options, feel free to call us to explore Chapter 7 or Chapter 13 bankruptcy options in one of our Columbia, Florence, or Greenville offices.