Types of Bankruptcy
Chicago Chapter 7 & Chapter 13 Bankruptcy Lawyer
The two most common types of bankruptcy are Chapter 7 and Chapter 13. These are different in a number of ways and one may be more beneficial to each different type of debtor than the other kind, as they each have particular advantages. By talking to a qualified Chicago bankruptcy attorney about your particular financial situation, you have the opportunity to find out more about which type of bankruptcy you might qualify for, as well as which type could be more beneficial to your unique circumstances. At Joseph P. Doyle, we offer a free bankruptcy evaluation to help you get started.
Which type is right for you?
While the best way to determine whether you qualify under Chapter 7 or Chapter 13 and decide which option is best for you is to talk directly to our Chicago bankruptcy lawyer, we provide some basic information for your convenience.
The two common types of bankruptcy are:
- Chapter 7 bankruptcy is most often beneficial to individuals with low incomes and little property that would need protection from liquidation. A person who has little to no money left over after basic monthly expenses would likely be a good candidate for a Chapter 7 case, but one must first find out if they qualify by taking a means test.
- Chapter 13 bankruptcy is often an option for individuals with higher incomes who have real property and other assets they need to protect. An individual who has a regular income and can pay basic living expenses but is facing overwhelming debt or foreclosure could qualify for Chapter 13.
Chapter 7 can be referred to as "liquidation" and entails a debtor surrendering nonexempt assets to the bankruptcy trustee. These assets are then sold and the proceeds are used to pay creditors. A Chapter 13 case can be referred to as a "reorganization" or "wage earners plan." In these cases, the debtor works out a payment plan to pay a portion of eligible debts over a period of three to five years. Either way, you can discharge all eligible debt at the conclusion of the case.