Why balance in bankruptcy filing is important

When it comes to bankruptcy filing, some people may have a preference for one type of bankruptcy over another. Those who are considering filing for bankruptcy may also be more likely to file for Chapter 7 than Chapter 13 depending on whether they live, or vice versa.

Some state that this is not a good thing, especially in areas where Chapter 7 bankruptcy filings are preferred. Generally speaking, debts are wiped clear under Chapter 7. With the exception of the Southeastern states, many other areas of the country have a preference for Chapter 7 bankruptcy. However, Chapter 13 bankruptcy allows the local economy to flourish. This is due to the fact that Chapter 13 puts money back into it through debt payment plans. One lawyer has even stated that actively discouraging Chapter 13 bankruptcy does not help one’s community.

On the other end of the spectrum, it is important for people filing for bankruptcy to get what they need. In some cases, a debt repayment plan simply is not feasible. For those people, there usually is no other option outside of Chapter 7 bankruptcy, which allows them to wipe the slate clean and start over again. It is also speculated that the economy, culture, demographics and history of an area may impact the preference for one type over the other.

In the end, it is up to the individual in question to find which type works best for them. Anyone who is considering filing for bankruptcy in general may wish to contact a bankruptcy attorney to speak with them in more detail.

Source: Albuquerque Journal, “NM debtors tend to shun filing Chapter 13,” Richard Metcalf, May 11, 2015

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