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If you’re thinking about filing for bankruptcy, you may be unsure if you should file for Chapter 7 or Chapter 13. Chapter 7 erases some of a filer’s debt by liquidating his property, while Chapter 13 sets up a long payment plan to pay off debts. Though both are very effective ways for dealing with debt, they are meant for different financial situations. Read on for information about when you may want to consider filing for Chapter 7 bankruptcy.


To qualify for Chapter 7, you’ll need to supply information about your income in relation to the amount of money you owe. If you have so much debt that you will never realistically be able to pay it off, Chapter 7 might be right for you. Chapter 7 bankruptcy is more ideal for people who have a large amount of unsecured debt, like credit cards, medical bills, or utility bills. These debts will be discharged, or released, through Chapter 7 bankruptcy proceedings, and any wage garnishments or creditor phone calls regarding them will cease immediately. However, if your debt is mostly from sources that cannot be discharged, like student loans or court-ordered restitution, you may find that Chapter 7 doesn’t provide much help, as you’ll still have to pay those debts.


Most property is liquidated or sold during Chapter 7 bankruptcy proceedings to pay creditors, meaning the potential loss of your car, home, boat, or other large items. If you have a lot of big-ticket items that you want to keep, Chapter 7 might not be the best bankruptcy choice for you. On the other hand, if you don’t have property to lose and want to discharge your debts quickly, this type of bankruptcy might be the best way to get a fresh start as soon as possible.


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