I live in Oklahoma. What is the difference between Chapter 7 and Chapter 13 bankruptcy?

I live in Oklahoma. What is the difference between Chapter 7 and Chapter 13 bankruptcy?

If you are having difficulty paying your debts and creditors are calling, you can take comfort in knowing that you have options to help restructure or relieve yourself of debt. Chapter 7 and Chapter 13 are statutes in the United States Bankruptcy Code that you should consider, depending on your circumstances.

Many people prefer filing for Chapter 7 because it eliminates most debt, including credit card balances, medical bills, utility bills and other loans or credit that were extended without a collateral requirement. Chapter 7 allows quick relief from creditors because it takes as little as three months for a bankruptcy court to issue a discharge order. After discharge, the debtor no longer has personal liability for the discharged debt.

However, there are downsides. Under Chapter 7, a trustee will sell a debtor’s non-exempt property to pay creditors with the proceeds. Additionally, for the next seven to 10 years, you will have difficulty if you try to obtain financing of any kind.

To qualify for Chapter 7, your average monthly income for six months prior to filing for bankruptcy must be equal to or less than the median income in your state.

If your income is higher than the median income in your state and you are able to repay some portion of your debt, a Chapter 13 bankruptcy may suit you better. In Chapter 13, you will repay obligations in a three- to five-year plan to the bankruptcy trustee, who will distribute it to creditors.

In many cases, filing for Chapter 13 will prevent a home foreclosure from occurring. The court will approve of the debtor’s repayment plan, and the debtor will pay back the missed payments over the life of the plan. (In Chapter 7, it is less likely that a debtor can keep his/her home if mortgage payments have been missed.)

Chapter 13 also can stop your car from being repossessed. And you can keep non-exempt property like family heirlooms, collections, a second automobile or a second/vacation home. Chapter 13 allows you to pay off some debts, like student loans and tax debts, in a repayment plan.

It’s wise for you to seek consultation regarding bankruptcy filing. The Gooding Law Firm, established in 1989 by O. Clifton Gooding, is considered the largest bankruptcy firm in Oklahoma. We’ve handled thousands of bankruptcy cases, assisting people and companies who were struggling with serious debt problems. We make sure that the harassing phone calls from creditors stop immediately. Our top priority is for you to get back on your feet again and on your way to good financial health.

For a free initial consultation, please go to our website at www.goodingfirm.com or call us at 405-948-1978 or toll free at 866-296-9179.