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Chapter 7 vs. Chapter 13: which is better for you?

If you are a Connecticut resident whose debts have gotten out of hand and you are unable to pay them, you may be considering bankruptcy as a last resort. You may or may not be aware that there are several different types of bankruptcy and that you will need to decide which type is better for you.

Most people file either a Chapter 7 or a Chapter 13 bankruptcy. Both types can help you relieve or discharge your debts, but there are differences between them as to who is eligible for each type and exactly what each type will do for you.

As Findlaw explains, Chapter 7 bankruptcies account for approximately 71 percent of all bankruptcies filed. This is because a Chapter 7 bankruptcy is simpler and takes less time to complete. There are, however, maximum income qualifications you must meet in order to file for Chapter 7.

Credit card debt

If your credit card balances and payments are what is causing most of your financial problems, Chapter 7 may be your best choice. Under most circumstances it wipes out all of your consumer debt, including credit card debt. In a Chapter 13 bankruptcy you must continue to make your credit card payments during the pendency of the bankruptcy, but any remaining balances at the time it concludes will be wiped out.

Home and cars

If you are like most people, you have a mortgage on your home. If mortgage payments are the main cause of your financial difficulties, Chapter 13 may be your best choice. Here you will agree to make court-ordered mortgage payments, but assuming you stay current with them, you will be able to keep your home. While a Chapter 7 bankruptcy may allow you to forestall losing your home through foreclosure, it will not necessarily prevent it from happening. The same considerations apply to any vehicles you do not yet own free and clear.

Alimony, child support and student loans

If you are wishing to wipe out your student loans or your obligation to pay alimony or child support, neither Chapter 7 nor Chapter 13 can accomplish this for you. This information is provided for educational purposes and should not be interpreted as legal advice.

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Contact my office to discuss your debt relief needs directly with me as your lawyer. I offer a free initial consultation to all new clients where you can learn more about your legal options and what I can do to help you. I am available during regular business hours and by appointment at other times. You can reach me by phone at 860-242-0574 and 860-952-3674 or via email.

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