In a perfect world, you wouldn't be contemplating a bankruptcy filing at all. But you live in the real world, and you're facing very real debt that you are unable to pay. Bankruptcy seems like your only viable option at this point, but which type of bankruptcy fits your situation? Most individuals file for Chapter 7 or Chapter 13, and one of these will probably be right for you.
Reasons to Choose Chapter 7
Chapter 7 bankruptcy involves the liquidation of your non-exempt assets. The revenue brought in by what is liquidated is then distributed among your creditors, but any remaining debt (that qualifies) is cancelled. Consider filing for this type if the following applies to you.
- You have no hope of repaying your debts. Chapter 7 can eliminate most of your debt, and this may be the biggest reason why so many people choose this option. In many ways, a discharge from this kind of filing offers you a "fresh start" to your financial life and can make it easier to qualify for an auto loan even after bankruptcy
- You want for things to move quickly. A typical Chapter 7 case is completed in less than a year.
- The property that you want to keep qualifies as "exempt." While a portion of your property is supposed to be seized and liquidated in order to pay creditors, certain items of your choosing may be labeled as exempt, and you get to keep them. Just how much you're allowed to claim as exempt varies from state to state, so check to see what your particular laws dictate.
- You pass the "means test." Chapter 7 Bankruptcy is not intended for people who have enough disposable income to pay their debts, so you must prove that you bring in less than a certain amount (which varies from state to state) in order to qualify for filing.
Reasons to Opt for Chapter 13
If you file for a Chapter 13 bankruptcy, you will be responsible for a portion of your debts, which you will pay over the course of either 3 or 5 years. Consider choosing this type of bankruptcy if the following is true.
- You have a sincere desire to repay your debts. It may be the case that you need the protection and restructuring of your debt schedule that bankruptcy can provide.
- You don't mind committing to a lengthy process. While Chapter 13 takes much longer to complete than Chapter 7, it will also disappear from your credit report more quickly, allowing you to improve your credit after bankruptcy the fastest.
- You have nonexempt property that you want to keep. If, for example, you know for a fact that your home is worth far more than you would be allowed to keep in a Chapter 7 bankruptcy, you may want to consider a Chapter 13 filing.
- You don't pass the "means test." If your income is too high to qualify you for Chapter 7, but you know that some form of bankruptcy is the only way to ease your financial struggle, Chapter 13 may be your only option.
If you have recently been discharged from either a Chapter 7 or a Chapter 13 bankruptcy, and you're in the process of rebuilding your credit, you may find that you need an auto loan. But because your credit score has taken a huge hit from the bankruptcy, you may think that you won't be able to get financing. Luckily, this isn't true. Auto Credit Express can help. We know that you deserve both reliable transportation and a second chance, and we can work with your situation. Just fill out our fast and secure application to get started today.