Don’t worry if you’re not sure whether you need to file Chapter 7 Bankruptcy or Chapter 13. That is a decision you should only make after you have discussed your case with a qualified lawyer. Chapter 7 is sometimes called a liquidation, although that is not nearly as bad as it sounds. If your debts are primarily credit card debts or medical expenses, Chapter 7 may be right for you. You don’t have to make monthly payments to a Trustee in Chapter 7, and the attorney fee is usually lower than in a Chapter 13. The downside of Chapter 7 is that it won’t enable you to pay back due amounts (arrearages) you owe on a mortgage or a vehicle. Most individuals will qualify to file Chapter 7. However, if your income exceeds a certain amount, you might not.
Chapter 13 is for persons who have a regular income and can set aside some of that income to pay at least something to their creditors. Chapter 13 is sometimes called a wage earner’s plan. If someone has a steady job but has fallen behind on a house payment or car payment, Chapter 13 can help that person avoid foreclosure or repossession. If you can make monthly payments to continue paying the monthly mortgage payments or car payments, and if you can pay something more to catch upon what you owe the mortgage company or finance company, then Chapter 13 may be what you need.
It doesn’t matter how you receive money. It could be from wages, Social Security benefits, a pension, or whatever. If you receive regular monthly benefits and you have debts you cannot pay immediately, you may qualify to file Chapter 13. You will have to make monthly payments to the Chapter 13 Trustee during the course of your bankruptcy to pay your secured creditors such as your mortgage company and finance compamy, to pay an extra amount to catch upon on your payments (cure your arrearages), to pay something to your unsecured creditors, and to pay the Trustee’s administrative fees and your attorney’s fees. If you have a question about bankruptcy, please feel free to call me at 501-604-4525. I will be glad to discuss your situation with you at no obligation.