Debt Payment Options: Bankruptcy

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Chapter 7 – or “liquidation” or “straight bankruptcy” involves the liquidation of most of the debtors unsecured debt. A trustee appointed by the court gathers and sells your nonexempt property. The proceeds from the sale pay your creditors. You’re able to keep any “exempt” property.

Chapter 13 – or “personal reorganization bankruptcy” Involves a court appointed trustee to organize a repayment plan that sets forth with specificity the manner in which debtors will settle their debts or pay off in full over three to five years.

Both Chapter 7 and Chapter 13 bankruptcy represent a severe negative impact on your credit for 7-10 years. Even filing for bankruptcy can be costly as a typical filing can cost up to $2,500. Filing for bankruptcy could affect your employment status or ability to get hired.

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• May have a negative impact on your employment status or future employment.
• In a Chapter 13 filing, you may end up paying 75 – 100% of your debt back.
• Chapter 7 is much more difficult to qualify for under the new bankruptcy laws.
• May result in higher interest rates on future loans.
• Carries a negative stigma, mental stress, and other burdens.
• Bankruptcy is a “last resort”.
• Chapter 13 completion rates average only 32%.