Filing for bankruptcy is an option you likely wanted to avoid, but now it seems that you’ll need to file to get the creditors off your back and get your debts erased. Maybe you’ve already begun researching bankruptcy, but you’re surprised by the number of chapters available for debtors.
Chapters 7 and 11 bankruptcies are common types of bankruptcy to file, but which is best for you? If you’re not sure what the differences between Chapter 7 and Chapter 11 bankruptcy are, you may need help deciding what’s most appropriate for you and which type you should file for.
While both chapters of bankruptcy have their benefits, you’ll need to determine which is right for your needs and what will be most effective for getting yourself out of debt.
Chapter 7 Bankruptcy
In some cases, the best way for you to get out of debt is through liquidation. This could be the case if you have several valuable assets and you want to get out of debt as quickly as possible, even if it means giving up many of these assets. If you’re looking to sell some of your property and use this to pay off your creditors, Chapter 7 bankruptcy may be for you.
Unlike Chapter 11 bankruptcy, which takes years to complete, with Chapter 7 bankruptcy you’ll sell your nonexempt assets all at once to pay off your debts. This includes things like the following:
- Second homes
- Extra vehicles
- Musical items or collections of valuable items
- Family heirlooms
- Cash and investments
Once you’ve given up this property, the costs of these will be split evenly between the creditors and your debt will be cleared. This gives you a fresh start as soon as possible.
Chapter 11 Bankruptcy
If you’re making a regular income and want to pay your debt off over time, however, Chapter 11 might be the better bankruptcy option for you. For those seeking to pay their debts off over time, rather than all at once like Chapter 7 requires, this might be the better option for you.
Chapter 11 bankruptcy requires that you make a budget and plan for repayment, so unlike with Chapter 7, you’ll have three to five years to make your payments and pay off your debt. Instead of selling off your assets, you’ll instead pay off your debt in payments. While this should still end the constant calls from your creditors, it’s a less drastic option for those who want to start fresh.
Seek Legal Counsel Before Choosing
While each bankruptcy plan has its benefits, it can be difficult to choose a plan when you’re in the middle of struggling with bankruptcy. Fortunately, a good bankruptcy lawyer can help you choose the best plan for you. At Rowdy G. Williams Law Firm, we’ll review your situation and debt, and we’ll help you determine which direction is best for you.
If you’re struggling with your debt but you’re not sure how the differences between Chapter 7 and Chapter 11 bankruptcy will affect your situation, reach out for help. We’ll review your claim and help you make the best decision for you before you begin.
To get started, fill out the online form below or give us a call at 1-812-232-7400.