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Which chapter is right for you?

On Behalf of | Oct 23, 2017 | Blog

When it comes to trying to overcome financial obstacles, there’s no one right or wrong way to do so. Your situation may be vastly different from your nearest Tennessee neighbor’s. On the other hand, you may have several issues in common yet determine that your most viable options to resolve your problems are not the same. Whatever events led to your financial crisis to begin with, there’s likely a light at the end of the tunnel of which you might not be aware.

One might call that light bankruptcy. If you grew up having a knee-jerk reaction to that word due to the negative stigma attached, you are definitely not alone. However, once you understand the different types of debt relief, you may come to realize that not only is it not necessarily a bad thing, it may, in fact, be quite beneficial in some ways.

Chapter 7 versus Chapter 13: How to tell one from the other

Both forms of bankruptcy can help you obtain immediate debt relief. There are eligibility requirements associated with each process, and you must completely satisfy all requirements before filing for protection. The following list provides information to help you understand the differences between these two forms of bankruptcy, as well as which one (if either) might be right for you:

  • Chapter 7 bankruptcy involves complete liquidation of all your assets. Also, if you have a mortgage or car loan, you will likely have to pay the wholesale value or return the items to your creditors.
  • With Chapter 7, creditors may challenge the discharging of your debt in court.
  • In order to be eligible for Chapter 7, your income must be below a particular level.
  • Of the two bankruptcies, Chapter 7 is the simpler process.
  • Bankruptcy protection does not cover child support, student loans or alimony. In other words, you will still owe these debts.
  • Chapter 13 prohibits creditors from contacting your co-debtor to attempt to collect payment.
  • Chapter 13 also allows you to keep your valuable property that is non-exempt.
  • You can re-file for Chapter 13 (or another type of bankruptcy) after having already filed. However, this is not so with Chapter 7. You cannot re-file, unless you file the second time for Chapter 13.

It can be quite challenging to determine which option best suits your particular needs and ultimate financial goals. Generally speaking, you’re probably most concerned with getting your bills paid off and finding a way to rebuild credit and restore financial stability. Many Tennessee residents turn to experienced debt relief attorneys for help in overcoming serious financial problems.


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