Hammond & Hammond, P.C.

Consumer Bankruptcy

Which is better: Chapter 7 or Chapter 13?

If you are experiencing financial problems, such as overwhelming debt from credit cards or medical bills, you may have already looked at bankruptcy as a way to get immediate relief and begin to put your financial issues in the rear-view mirror. However, when you are at the point where you are ready to contact an attorney to discuss a bankruptcy filing, you'll come across variations in the bankruptcy law that you might not have considered.

The most prominent among these is the two most common forms of consumer bankruptcy, not just in Georgia but around the nation: Chapter 7 and Chapter 13. While each one has its benefits, multiple factors can play into which path individuals end up taking. The answer to the question "Which option is best for me?" is going to have a different answer for everyone.

While both Chapter 7 and Chapter 13 have features in common -- most importantly, a discharge of debt at the end of the process -- the machinery behind each of them is significantly different.

One obvious difference is the length of time each one takes. Under Chapter 13, people who file enter into a payment plan to pay back a portion of what they owe. This plan usually takes 36 to 60 months, or three to five years, with payments due every month, and those who file generally keep their assets. By contrast, those who file for Chapter 7 often have some of their assets sold in order to pay immediately toward their debts. It takes considerably less time to emerge from bankruptcy, however.

In many cases, the best way to figure out how your bankruptcy might be handled is to speak with an experienced Georgia attorney about your situation.

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