Many Florida residents struggle to keep up with their bills and debts, and when interest starts to compound on those debts, it often becomes even more difficult to see the light at the end of the tunnel. If you are among those whose finances have started spiraling out of control due to medical, credit card or other bills, you may be questioning whether filing for bankruptcy might be the right step for you.
Per Quicken Loans, if you decide to move forward with filing for bankruptcy, there are two paths you might take. The first is a Chapter 7 bankruptcy filing. The other is a Chapter 13 bankruptcy case.
Chapter 7 bankruptcy
A Chapter 7 bankruptcy is also a “liquidation” bankruptcy. This means that you often have to turn over some of your assets during the bankruptcy process to get your debts discharged. This type of filing may make sense for you if you have limited financial means because you must take and pass a bankruptcy means test to file for Chapter 7 bankruptcy.
Chapter 13 bankruptcy
Chapter 13 bankruptcies are “reorganization” bankruptcies, rather than liquidation bankruptcies. This means they require you to reorganize your debts in a manner that makes it more feasible for you to pay them off. If you are able to stay atop your payback plan during a Chapter 13 bankruptcy, you should typically be able to keep your home and other assets.
Chapter 7 and Chapter 13 bankruptcies also differ in how long they take to discharge your debts. The Chapter 7 process often takes far less time to complete than a Chapter 13 bankruptcy filing.