Texans who are experiencing problems with debt will frequently consider a variety of alternatives to get on stronger financial ground before considering the potential benefits of bankruptcy. Once they understand that bankruptcy is a perfectly legal and viable solution to improve their financial standing, they are still puzzled by which chapter would be best for their situation. The circumstances will dictate the final decision, but for wage earners, Chapter 13 is frequently considered the ideal option. Understanding why is the key.
Technically, Chapter 13 is an Adjustment of Debts of an Individual With Regular Income. It is used to let a debtor with a source of income have a plan in which they make payments for a certain time-period. This generally lasts for three to five years. For those who are debating on Chapter 7 vs. Chapter 13, there are a number of factors they should keep in mind. For example, people who have assets like a home or a motor vehicle will want to pick Chapter 13 as it allows them to retain the property. Chapter 7, a liquidation process, does not allow that in most cases.
Creditors are repaid through Chapter 13. In that way, it is different from Chapter 7. While Chapter 7 is useful in that it discharges the debts, those who have items to keep will lose those items in Chapter 7. They will not in Chapter 13. It is important to note that the debts will not be discharged until the payments have been completed under the Chapter 13 agreement. There will be no wage garnishments, lawsuits or any other tactics to receive payments while the Chapter 13 is in progress. There are more debts eliminated through Chapter 13 than in Chapter 7.
One of the most important factors in deciding which bankruptcy chapter to use may be to have legal assistance. Once that decision is made, a law firm that specializes in helping clients with their debt problems can be beneficial in every aspect from filing the case, organizing it and having all the required information to complete it successfully.