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Chapter 7 vs. Chapter 13 bankruptcy

On Behalf of | Nov 3, 2023 | Bankruptcy

Anyone in Ohio facing insurmountable debt may benefit from filing for bankruptcy. Two types of consumer bankruptcy filings are available: Chapter 7 and Chapter 13. Here is a rundown of what both types of bankruptcy involve.

Chapter 7 bankruptcy

The Chapter 7 option is ideal for individuals with mostly unsecured debt they cannot repay. This is debt that collateral, like a car or house, does not protect. This bankruptcy option may also be used to discharge overwhelming medical debt. Some assets, like cars, may be eligible to be declared exempt in order to prevent them from being used in the repayment process. Individuals must earn less than the median income of their state to qualify for Chapter 7 bankruptcy.

Chapter 13 bankruptcy

Individuals with higher incomes than the median income of their state may opt to use the Chapter 13 filing process instead. This option allows filers to develop and execute repayment plans lasting between three and five years while keeping their homes and cars. Their repayment plans, which must be approved by the Bankruptcy Court, will enable them to decrease their debts by making several installment payments. The payment amounts will typically be based on the amounts they can reasonably pay.

How a bankruptcy attorney can help

A bankruptcy attorney in Ohio can help an individual struggling with heavy debt determine which type of bankruptcy he or she is eligible for. The attorney can then help the individual complete the necessary paperwork for the filing. An attorney may additionally help someone filing for Chapter 13 bankruptcy draft a detailed repayment plan. The attorney will strive to ensure that his or her client’s financial best interests are protected during each step of the process.