If you stepped into 2018 with serious financial problems, you are definitely not alone. In South Carolina and throughout the nation, many people are currently trying to overcome serious financial obstacles. For some, unexpected job loss or medical crisis quickly turned financial stability to chaos. On the other hand, you might simply be one of many whose spending got out of hand and credit card bills began piling up until your debt outweighed your financial resources. The good news is that most financial problems are temporary.
Much depends on the details of your situation as well as what type of options you access to help you get things back on track. The latter may prove challenging, especially if you haven’t a clue as to what types of debt relief options are available in your situation. You’ll be glad to know there is guidance support available in your area. Many people use Chapter 7 or Chapter 13 bankruptcies to resolve their financial problems. The question is, how can you determine which option would help you most?
Differences between Chapter 7 and Chapter 13
Before you can make an informed decision as to which type of debt relief option is most viable in your particular situation, you’ll want to familiarize yourself with both kinds of debt resolution. The following information explains the main differences between the two and why you might choose one over the other:
- Chapter 7 bankruptcy typically includes a complete liquidation of assets.
- Both types of bankruptcy list eligibility requirements that you must satisfy before you can apply.
- Certain debts are not dischargeable under Chapter 7; however, such debts may, in fact, be dischargeable under Chapter 13. These types of debts might include court fees, settlement agreements in finalized civil litigation situations (such as your order to pay compensation for damages in a personal injury claim) and certain types of tax debt.
- Chapter 13 protects codebtors from liability if lenders receive payments in a restructured plan.
- If a restructured plan would still leave you unable to pay off your debts, then Chapter 7 may be the better option for you.
Basically, Chapter 7 completely liquidates your assets and satisfies your debt by converting asset value to payments to pay creditors. On the other hand, Chapter 13 allows you to retain ownership of your assets and create a restructured payment plan to pay off your debts. With the latter option, you must show proof of current, steady income.
Tap into support resources
There’s no need to go it alone when you’re trying to figure out whether Chapter 7 or Chapter 13 bankruptcy might help you put your financial feet back on solid ground. It’s a lot easier to rely on others who have experience with both types of bankruptcy to help you determine the best plan of action.
Many South Carolina residents seek debt relief support by asking experienced bankruptcy attorneys to review their cases.