How can I choose the right bankruptcy plan?

Salt Lake City residents should perform a comparison of Chapter 7 and Chapter 13 bankruptcies to select the one right for them.Many experiences can leave Salt Lake City residents facing serious and negative financial situations. A single medical diagnosis can virtually cripple even the most financially stable person. An unexpected job loss, a divorce or a disability due to a work-related accident are additional examples of things that can contribute to financial hardships for consumers.When times are tough, consumers understandably look for assistance. One way that many people have been able to get the help they needed was through bankruptcy. How can people know if bankruptcy is right for them? If bankruptcy is a potential option for debt relief, how can a consumer know which type of plan to choose? Understanding both types of common consumer bankruptcies is a must before making these decisions.
Consumer's ability to pay
Whether or not a consumer has the ability to pay some of the debt owed or not can be one way of identifying the right type of plan. 360 Degrees of Financial Literacy explains that Chapter 13 bankruptcies require the repayment of debts. With Chapter 7 plans, there is no repayment required.Home ownershipConsumers who own homes and wish to keep them may often be better suited to Chapter 13 plans. According to the U.S. Courts, filing a Chapter 13 may stop foreclosure proceedings and give homeowners the chance to get current on mortgage payments.The American Bar Association indicates that with a Chapter 7 plan, secured assets may be sold in order to pay creditors at least some of what is owed to them. There are some exemptions available which may allow debtors to keep some items but that is based upon their values. Chapter 13 plans are set up to allow people to keep their secured items under the structured repayment method.

Length of time involved

Experian reports that a Chapter 7 bankruptcy plan may be completed in as little as three months. A Chapter 13 plan, in contrast, can last up to 60 months. Payments are made on a regular basis to a trustee. The trustee then distributes the money to creditors until the term of the plan is complete.

Amount of debt and income

The amount of assets, liabilities and income that a consumer has can also impact the better choice of bankruptcy plan. In both Chapter 7 and Chapter 13 plans, debtors will provide detailed financial statements and related documentation to ensure that they meet the eligibility criteria of their requested plan.

The level of knowledge involved in how to properly create these plans is extensive and debtors are encouraged to work with an experienced bankruptcy attorney. Getting the right advice can help consumers make the right choices for their situations.