Providing New Jersey Residents With A Fresh Start
  1. Home
  2.  — 
  3. Chapter 7 And Chapter 13 Bankruptcy
  4.  — Is it better to file for Chapter 7 or Chapter 13 bankruptcy?

Is it better to file for Chapter 7 or Chapter 13 bankruptcy?

On Behalf of | Mar 5, 2023 | Chapter 7 And Chapter 13 Bankruptcy |

If you’re interested in filing for personal bankruptcy, you’ll likely be choosing between Chapter 7 and Chapter 13 relief. Chapter 7 is often preferable for those who qualify, as this process doesn’t require repayment of debt before a discharge will be ordered. The Chapter 13 bankruptcy process lasts for 3-5 years and allows filers to restructure their debts.

Each bankruptcy process features its own benefits and drawbacks. By carefully researching your options and considering the unique nature of your own financial situation, you’ll be able to make the best possible choice for you and your family. 

Eligibility basics

Not everyone is eligible to file for bankruptcy relief under Chapter 7 of the federal bankruptcy code. This opportunity is reserved for individuals – and married couples filing jointly – who do not earn much income. As a result, aspiring filers will need to meet an income-based “means test” threshold before they’re permitted to file for bankruptcy under Chapter 7. 

Conversely, it is difficult for aspiring filers to take advantage of the restructuring options afforded by the Chapter 13 bankruptcy process unless they earn a relatively decent, steady income. The eligibility requirements for this form of debt relief are more nebulous, but a filer must generally be able to demonstrate that they’ll be able to make consistent, manageable debt payments before their Chapter 13 case will be approved. 

Weighing your options

In the event that you’re eligible to file for Chapter 7 bankruptcy, this is likely going to be the best option for you, unless your home is at risk of foreclosure and you want to save it and/or you own significant luxury property that would likely be sold in a Chapter 7 case. Under these circumstances – or if you’re ineligible for Chapter 7 debt relief – filing for Chapter 13 will be a superior opportunity. 

By carefully assessing the ins and outs of your unique financial circumstances and your goals for the bankruptcy process, you’ll be able to make an informed decision about whether filing for Chapter 7 bankruptcy or Chapter 13 bankruptcy is the best option for you, personally. Keep in mind that you can always seek legal guidance if you have questions or need assistance. 

FindLaw Network