To say that life has a way of throwing curve balls when you least expect it may seem like quite an understatement if the topic at hand happens to be serious financial crises. You may be one of many Texas residents who thought things were going well, only to wind up knee deep in financial trouble that feels like it came out of nowhere.
Maybe you or your spouse lost a job or incurred a decrease in your income (a lot of employers are doing away with bonuses and incentive pay), or perhaps someone in your household suffered a medical emergency that required repeated doctor visits or surgery. Any one of these issues can throw an otherwise stable financial situation out of whack. The good news is that bankruptcy is often a viable option to help wipe the slate clean and start afresh.
Chapter 7 versus Chapter 13
When determining a best course of action to seek immediate debt relief, it may not be enough to simply say you are going to file for bankruptcy. That's because there are different types, and you may, in fact, qualify for one but not another. The following list explains some of the differences between Chapter 7 and Chapter 13:
- Chapter 7 bankruptcy typically involves a complete liquidation of assets.
- To check your eligibility for Chapter 7 bankruptcy, you would need to take the means test. This measures your income against the median income in your state.
- If you earn the same or a higher income than your state's average household, you may not qualify for Chapter 7 bankruptcy.
- Chapter 13 bankruptcy allows you to retain major assets while restructuring your payment plans to satisfy debt you currently owe to one or more lenders.
- Your lenders must agree to the new payment plan.
- There are limits to how much secured and unsecured debt you can repay through Chapter 13 bankruptcy.
It helps to talk to others who have successfully overcome serious financial problems by filing for bankruptcy to determine which type of debt relief best fits your immediate needs and ultimate financial goals. No matter what type of bankruptcy you file, it will remain on your credit report for several years, but that should not necessarily discourage you from filing. By researching state laws and types of debt relief, you can begin to get things back on track and lay the groundwork for a stronger financial future.