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How Do I Choose Between Chapter 7 and Chapter 13 Bankruptcy Filing?

Before making a decision about the right form of bankruptcy for you, it is essential to clearly understand the the differences between Chapter 7 vs. Chapter 13 bankruptcy. While both forms of bankruptcy apply to consumer debt, the purposes, processes and rules that apply to them vary significantly.

The discussion of the bankruptcy process provided by the United States Courts also provides a good summary of the rules and the overall purpose of each form of bankruptcy. In essence, Chapter 7 bankruptcy (liquidation) enables qualified individuals to obtain a fresh financial start by selling certain assets and using the funds to provide creditors with partial debt repayment before they forgive any outstanding loan balances. Individuals must meet a means test proving their income falls below a median level required to qualify for Chapter 7. Chapter 13 (wager earner’s plans), on the other hand, permits individuals to restructure the terms of their loans to make them affordable, typically over an extended period.

In addition to the qualification requirements, many other issues can come into play when choosing between Chapter 7 and Chapter 13 bankruptcy filing. While individuals can potentially handle their own filing within the court system, they typically do not understand the complex legal ramifications of their decision. An experienced Chapter 7 or Chapter 13 bankruptcy attorney in Queens can thoroughly discuss your objectives and analyze your specific financial circumstances to help you make an educated choice.

At the Mark E. Cohen, Esq., we believe bankruptcy can mark a new beginning, but only if you carefully consider all available options before beginning the process. With over two decades of experience, the firm helps clients understand the full range of available options so they can make informed decisions.

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