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  • Writer's pictureSubhan Tariq, Esq


Bankruptcy is one option to consider when you are drowning in large debts that you cannot repay. Filing for bankruptcy is a big decision that comes with consequences, but sometimes, it can be the best option for you. If you ultimately decide to file for bankruptcy, one of your first major choices will be declaring a Chapter 7 or Chapter 13 bankruptcy.

Chapter 7 bankruptcy, also known as liquidation bankruptcy, wipes out a variety of unsecured debts. It may be your last alternative to help you reset your finances if you are severely behind on your payments and cannot find the money to cover your living necessities and regular payments. However, when you file for chapter 7 bankruptcy, you may lose some of your possessions to compensate your creditors in return. This will ultimately have a negative impact on your creditworthiness in the long run. The court will appoint a trustee that will liquidate your nonexempt assets to use to pay your creditors. After the proceeds are exhausted, the remaining debt is discharged – meaning you won’t have to pay them the remaining debt.

Chapter 13 bankruptcy places the debtor on a repayment plan that makes it easier for them to repay their debts as well as help them through their overall financial difficulties. The repayment period lasts for three to five years. After the period is completed, if there are some outstanding debts left, they may be completely discharged, removing your obligation to make any additional payments.

With Chapter 13 bankruptcy, you repay all or some of your debts under a court-mandated repayment plan and allow debtors to keep your property while making up missed payments on your mortgage, car, and non-dischargeable priority debt. On the other hand, under Chapter 7 bankruptcy, your eligible debts are immediately discharged rather than being placed on a repayment schedule. It allows debtors to quickly discharge most of the debt and get a fresh start.

There is an eligibility criterion for filing for either type of bankruptcy. For Chapter 7 bankruptcy, your household’s income must be less than your state’s median for a household of a similar size, or you will have to pass a means test to determine whether you qualify for Chapter 7 bankruptcy. For Chapter 13 bankruptcy, you must have a regular income, your unsecured debt cannot exceed $419,275, and secured debts must be under $1,257,850.

Before you make a choice, consult with an expert attorney to help you make the right decision.

To know more about bankruptcy or for a free consultation, contact us at



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