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Chapter 7 vs. Chapter 13: Which Bankruptcy Filing Status Is Right for You?

Last updated 2 years ago

The trying economic times of the last several years have affected Americans in a number of different ways. As a result, declaring bankruptcy has become incredibly common and helpful for millions of people who are struggling to make ends meet. Chapter 7 and Chapter 13 are two types of proceedings that can discharge bad loans and help you make a new start. Before you speak with a bankruptcy attorney, here is a look at both Chapter 7 and Chapter 13 to help you decide which filing status is right for you.

Chapter 7

Chapter 7 is designed to help debtors discharge unsecured loans and consumer debt in order to start anew. This type of bankruptcy solution is effective for individuals with high credit card debt who earn less than the median yearly income in their state. In Illinois, a family of four with a household income of 81,465 or less is eligible to file for Chapter 7. This bankruptcy option is effective for families who have recently fallen on hard times or lost their jobs as a result of the recession. However, it may mean that the court repossesses some of their property to pay overdue loans.

Chapter 13

If a family is facing foreclosure or earns more than the average household income in their state, they can file for Chapter 13 bankruptcy. While this does not automatically wipe away credit card debt, it prevents liquidation of property and helps many Americans keep their homes. This legal action can also help stop any pending foreclosure procedures with an automatic judicial stay. The remainder of a mortgage is then reconfigured on terms that are more favorable to the borrower. After Chapter 13, the debtor has between 3 and 5 five years to pay off their structured settlement.

If the bank is threatening foreclosure on your home, or if creditors are calling non-stop, bankruptcy may be the right solution to your financial problems. Illinois residents who are thinking of filing for bankruptcy should call the Belleville office of Dixon & Johnston, P.C. at (618) 233-1103. Our experienced bankruptcy attorneys can help ensure that you make the most of your bankruptcy filing. 


The materials available at this website are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use and access to this website or any of the links contained within the site do not create an attorney-client relationship. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney.


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