When making a significant decision, gathering information about the different options regarding that decision could be a wise step to take. Therefore, if Tennessee residents are considering bankruptcy, they may wish to explore the different types of bankruptcies and whether they may be able to qualify for Chapter 7 or Chapter 13. Each type has its benefits, but one avenue may be more suited to certain circumstances than the other.
Chapter 7 bankruptcy may be more beneficial to individuals who may not have reliable incomes. This option does not rely on a repayment plan, but, rather, individuals who qualify and file for this type liquidate their assets in order to repay secured debts. Secured debts are liabilities, such as loans taken out for a house or car. If these debts cannot be repaid, then the collateral associated with those liabilities is surrendered. Credit card and other unsecured debts are often completely discharged under this type of filing.
For Chapter 13 bankruptcy, a repayment plan is utilized in order for individuals to pay back as much debt as they can. Therefore, this option may be better suited for individuals who have a steady income with which to make payments. This course often takes three to five years to complete.
Though this information is broad and simplified, individuals may be able to gain a better idea of the general uses for Chapter 7 and Chapter 13 bankruptcy. If these options appeal to Tennessee residents looking for debt relief assistance, they may wish to gain further knowledge on the options. Information is available from local reliable resources, and an experienced bankruptcy attorney may be able to provide useful insight, if desired.
Source: news-gazette.com, "John Roska: How Chapter 7, 13 bankruptcies differ", John Roska, April 17, 2016