When it comes to filing for bankruptcy, people typically opt for Chapter 7 or Chapter 13. If you’re unable to decide between the two, the skilled legal team at Bueker Law Firm recommends selecting Chapter 13 bankruptcy for a few important reasons. This Stuttgart, AR law firm offers dependable legal guidance on matters related to debt, including which bankruptcy option is preferred based on the client’s needs.

Your Guide to Bankruptcy: Chapter 7 vs. Chapter 13

What Is Chapter 7 Bankruptcy?

Most debt can be discharged when Chapter 7 bankruptcy is filed. However, your property may also be seized and sold to satisfy the outstanding debt. Once the process begins, the court orders an automatic stay, which means that creditors are not permitted to contact you to recoup on money owed. You must meet certain criteria to be eligible for Chapter 7, including a means test that will establish your inability to pay off debt while also taking care of basic living expenses.  

How Does It Differ From Chapter 13?

Conversely, Chapter 13 allows for a reorganization so debtors can make payments instead of having debt discharged. Payment plans typically range between three and five years, and payment amounts are based on the debtor’s ability to pay. The goal is to allow a total repayment of the debt without risking your current financial status.

Why Is Chapter 13 Preferred?

Chapter 13 is the preferred option because selling off property isn’t usually necessary; however, your income will play a significant role in whether you can secure a Chapter 13 bankruptcy. If your income is insufficient, it’s unlikely that you’ll be able to keep up with a repayment plan, no matter how reasonable. If you do have some disposable income, most bankruptcy attorneys recommend sticking with Chapter 13.

If you have questions about bankruptcy in Stuttgart, the staff at Bueker Law Firm has the skill and knowledge to get your finances back on the right track. Schedule your consultation today by calling (870) 673-1313. If you’d like to learn more about the full range of legal services currently available, feel free to visit the law office’s online.