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It can be challenging to determine whether Chapter 7 or Chapter 13 bankruptcy might be best for you. Consider meeting with an experienced bankruptcy attorney to discuss what each type of bankruptcy filing entails. While a Chapter 7 bankruptcy may seem ideal because it involves the quick discharge of many types of debt, it may not be right for everyone.

When You Do Not Pass the Means Test

Chapter 7 bankruptcy may not be an option for you if you do not meet the eligibility requirements. To file for Chapter 7 bankruptcy, your income must pass the means test. To pass, your income must fall below the established median level of income for your particular area. The means test also assesses the financial status of those whose income is above this level. This involves evaluating whether you have enough disposable income to pay your creditors during a repayment period. Your disposable income is the money that is left after you pay your allowed expenses. Your total financial status will determine whether you are eligible to file for Chapter 7 bankruptcy.

When You Have Non-Dischargeable Debts

Even if you do qualify for Chapter 7, it may not be in your best interests. If your debt consists primarily of non-dischargeable debts that will not be eliminated in a Chapter 7 filing, then Chapter 13 may be best for you. These non-dischargeable debts include child support, alimony, income taxes, student loans, and court judgments.

When You Have Nonexempt Property

During Chapter 7 bankruptcy, the bankruptcy trustee will evaluate your property to determine what may be sold to pay your creditors. Exempt property cannot be sold, such as your car and equity in your home. If you have a substantial amount of nonexempt property, your bankruptcy attorney may advise you to file for Chapter 13 bankruptcy. Nonexempt property includes family heirlooms, valuable collections, and investments.

Let the bankruptcy attorneys at Cutler & Associates, Ltd. help you decide of Chapter 7 or Chapter 13 bankruptcy is right for you. During your free consultation, we’ll explain the ins and outs of each type of bankruptcy, and discuss your best legal options.