• Lower your monthly payments
  • Reduce stress and live your life
  • Avoid personal bankruptcy court

Bankruptcy – Chapter 7 vs. Chapter 13

Filing for bankruptcy can be either the best thing or the worst thing that you will ever do. When it comes to bankruptcy, you have two choices, avoid it or pick the best program. In both cases, you are in for a lot of work. There are many ways that one can avoid having to file for a Chapter 7 bankruptcy.

Chapter 7 bankruptcy

Ways to Avoid Bankruptcy

It has become a way of life for many people to have debt. When debt becomes overwhelming, an individual can turn to bankruptcy to help eliminate it. However, here are some ways that you can avoid it all together.

Selling and Reduce

When your payments get to be too much for you sell it. Get a cheaper car if the car payment or insurance is too much. Reduce your home size if you can no longer afford to make the monthly rent payments. Downsize your bills to help reduce your expenses. It can be amazing how much money that you can make from just selling some of your things.

Ask for Help

It is important that before you are cornered into a Chapter 7 bankruptcy you ask for help. You can contact your creditors. Let them know you are having financial troubles, express your willingness pay the debt; many times, they will help to decrease your monthly payment. If the creditors refuse to help then you could turn to a debt management company to help you.

Let Others Know

It is also important to always let you family know what is going on so that they do not require you to place yourself in further debt. You may even need to turn to them for help financially so do not be afraid to let others know of your situation.

Chapter 7 vs. Chapter 13

There are two types of bankruptcies that you can undergo, a Chapter 7 or a Chapter 13. A Chapter 7 bankruptcy has many advantages that the Chapter 13 does not have.


Bankruptcy terms are shorter with a Chapter 7 bankruptcy. A Chapter 13 bankruptcy usually takes between three and five years in order to complete. However, a Chapter 7 bankruptcy only takes four to six months to complete.


The legal fees are more manageable when you file a Chapter 7 bankruptcy. The fees compounded based on the length of time that you involved in the programs, in most cases. Since a Chapter 7 bankruptcy only takes a few months rather than three to five years required when filing for Chapter 13. With a Chapter 13 you will pay a monthly payment until you have completed your terms, however when you complete the Chapter 7 bankrurptcy you no longer have payments so there are no continual monthly fee.

Discharged Debts

When you file a Chapter 7 bankruptcy you are able to remove all of your unsecured. There are two types of debts, secured and unsecured. Secured debts are debts that have collateral such as mortgages, and car loans. Unsecured debts are debts that are not backed by collateral, like your credit card bills, medical bills, and personal loans. There are some unsecured loans that are distinguished from the others like student loans, child support, and taxes.

Freedom with Income

With a Chapter 13 bankruptcy you will be making payments every month for the next three to five years to payback the amount settled on in the bankruptcy estate. However, with a Chapter 7 bankruptcy you are not expected to make any payments or have a reduction on income. This allows you to keep all of the income you learn after the petition has been filed.


A Chapter 13 bankruptcy allows you to keep your assets, where the liquidation process is part of the Chapter 7 bankruptcy. However in the United States there are exemptions that can be applied which can be the loophole to keep many of your current assets. Just remember to look at the Bankruptcy Code to ensure that your assets are listed in their exemptions.

Bad Credit

When you file for bankruptcy, it is going to hurt your credit. The Chapter 7 bankruptcy has been shown to increase your credit score after the first 12 months. This can be a bonus because otherwise you are looking between seven and ten years of bad credit.

Whenever you find yourself in any amount of uncontrollable debt, know there are things you can do. You can search for those ways to begin to repair mistakes made. You can take the road of bankruptcy. It is important that no matter which bankruptcy chose you explore all of your options. Remember that not everyone will qualify for a Chapter 7 bankruptcy. If your income is above what the state median is then you will require filing a Chapter 13.