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What if I qualify for both Chapters 7 and 13?

When it comes to consumer bankruptcy, the law offers a few different options. In almost all cases, an individual qualifies for either Chapter 7 or Chapter 13 bankruptcy. However, in some cases, an individual may qualify for both types of bankruptcy, which can create some interesting opportunities. If you believe you may qualify for both Chapter 7 and Chapter 13, you have some very important things to consider.

First, it is important to fully understand all of your options in this scenario. Not only must you make sure that you do in fact qualify for both Chapters 7 and 13, you want to make sure that you fully understand the differences between the two so that you can make the most of your bankruptcy procedure.

It may help you to think of Chapters 7 and 13 as debt discharge through asset sacrifice versus debt reorganization. Chapter 7 is available to more consumers than is Chapter 13, and it requires giving up some of your assets, but also usually discharges a larger portion of debt. However, Chapter 13 allows those with higher incomes to keep assets as long as they abide by a several-years-long repayment plan.

Your financial specifics may benefit from one over the other, but it is crucial to do significant due diligence to make sure all benefits are considered. Once you decide which is truly the right for your debt discharge needs, you may simply choose the one you prefer. In fact, there is legal precedent to support debtors discharging significantly more debt through one type, against the objections of creditors.

While it is important to take action as soon as possible in bankruptcy, you must make sure you know how to properly execute the bankruptcy you choose. An experienced attorney can help guide you through the process, pointing you to hidden or complex benefits you might otherwise miss.

Source: Findlaw, "Bankruptcy: Frequently Asked Questions," accessed Oct. 13, 2017

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