What is the Difference Between Chapter 7 and Chapter 13 Filings?

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Those who find themselves buried in debt consider seeking financial relief by submitting a Chapter 7 or Chapter 13 filing, which are the two kinds of bankruptcy. In case you’re riddled with hospital bills, you can seek help with a Chapter 7 filing by hiring a medical bankruptcy attorney.

In Scottsdale, Arizona, for instance, some lawyers such as Barski Law Firm PLC specialize in practicing the law about all chapters of the bankruptcy code.

Debt Classification

Medical debt falls under the qualifications for Chapter 7 filings, which essentially grant debt forgiveness for financial obligations. Most Chapter 7 cases go smoothly if you follow the right procedures, and rarely end up with you having to surrender your property.

However, debtors with car loans and mortgages will have to surrender them since these are secured debts. Not all types of loans can be discharged as well, and this is where a Chapter 13 filing would be applicable.

Recent Income taxes, overdue child support and alimony payments will continue to be payable even after completing the filing process. The time it takes to complete a Chapter 13 process involves up to five years, while it takes up to six months for a Chapter 7 filing.

Are You Qualified?

Most people think that they could just file for bankruptcy and all their problems would simply go away. Chapter 7 debtors need to have a net income lower than the median salary in their state. Otherwise, you have to file for Chapter 13.

If you’re only problem concerns medical debt, it’s not possible to file for discharge without getting rid of other unsecured debts. Hence, debtors should take time to consider if going the bankruptcy relief route is the best way for them.

Whether you choose to file for a Chapter 7 or Chapter filing, don’t proceed without legal counsel from the beginning. Otherwise, it can significantly hurt your chances of rebuilding your finances in case you complete the process.