To shed financial stress and obtain a fresh start, many Ohio residents have turned to bankruptcy over the years. The most common bankruptcy programs are Chapter 7 and Chapter 13, so how can you know which is right for your situation? According to Experian, Chapter 13 is considered a reorganization bankruptcy and Chapter 7 is referred to as a liquidation bankruptcy.
Chapter 7 is often ideal for those with limited incomes who may not be able to pay back even a portion of their debts. To pay off the debt, most of your property and assets will be sold. With Chapter 13, you can keep your property if you keep up with a repayment plan that was approved by the court.
Both business entities and individuals can apply for Chapter 7, while Chapter 13 is available for sole proprietors and individuals only. The main benefit of Chapter 7 bankruptcy is that it allows those with debt to get a fresh start quickly and have their debts discharged within three to five months. Chapter 13 is beneficial because it allows debtors to catch up on payments like car loans and mortgages without forfeiting property. This type of bankruptcy is not complete until the payment plan is complete, usually anywhere from three to five years.
With a Chapter 7 bankruptcy, you could lose personal property, motor vehicles, homes, retirement accounts, jewelry and health aids. Those who have a regular income, unsecured and secured debt under certain amounts are qualified to apply for Chapter 13 bankruptcy to keep their property. A consumer may benefit from speaking to an attorney about which type is right for them.
This information is provided for educational purposes and should not be interpreted as legal advice.