Which Option is Right for Me?

Chapter 7 bankruptcy (straight bankruptcy) may be appropriate for you if you:

  • Cannot afford your mortgage or car payment(s) and have significant other debt
  • Owe more on the mortgage(s) than the original price of the home
  • Have a second or third mortgage on the home and the first mortgage is foreclosing or has foreclosed
  • Unable to pay more than the minimum on credit card payments
  • Without a job to pay any of your bills
  • Income dropped due to disability, layoff or collecting unemployment
  • Taking money from one credit card to pay on another
  • Have huge medical bills or significant credit card debt
  • Paying on your credit cards but never getting ahead
  • Unable to help your family because of your debts
  • Spending almost all of your income just to pay normal living expenses (housing, food, clothing, transportation, child care, etc.)?
  • Creditors calling and demanding money that you need to feed yourself or your family
  • No money left to pay credit card debt, medical bills or car payments
  • Wages needed for living expenses being garnished by a creditor
  • Current income does not exceed the amount dictated by the “means test” under the new bankruptcy law. For a single person the annual income cannot be more than $48,140; for a married couple of two people no more than $64,878; for a family of three no more than $70,890 and up to $79,477 for a family of four

Chapter 7 Bankruptcy gives you a fresh start by eliminating those debts you cannot afford to pay while allowing you to keep your property. Once these debts are wiped out in Chapter 7, you will not have to pay them.

Chapter 13 bankruptcy (debt repayment plan) may be appropriate for you if you:

  • Are behind on your mortgage payments, in foreclosure and want to save your home
  • Have enough income to make your mortgage payments, typical monthly living expenses, and a Chapter 13 plan payment
  • Owe taxes that do not meet the requirements for discharge
  • Want to protect a friend or relative who co-signed with or for you
  • Need to bring current child or spousal support payments
  • Have judgments that were incurred by reason of drunk driving or fraud
  • Need to protect non-exempt assets
  • Filed a Chapter 7 within the past 8 years
  • Have current income that exceeds the amount dictated by the “means test” under the new bankruptcy law

Chapter 13 Bankruptcy gives you a fresh start by reorganizing those debts you cannot afford to pay without Bankruptcy court protection. By lowering the total amount of (unsecured) debt payments and consolidating debts to one affordable monthly payment allows you to keep your home. Once these debts are repaid in Chapter 13, you will not have to pay them and you get a fresh start.