There is a world of difference between the two forms of bankruptcy available to the average debtor. It is very important to educate yourself about them, so you can work with your attorney to choose the filing that’s right for you.
As Philadelphia bankruptcy attorneys we will give you advice based on your financial situation and goals, but ultimately you will have to make, and live with, your decisions.
We’ve covered the actual differences elsewhere on our blog. Let’s talk about why you need to make sure you’ve explored those differences.
Filing incorrectly can leave you in an even worse position.
Filing incorrectly can mean you don’t get to keep assets you need to keep.
Many people file bankruptcy because they’re trying to save their houses or cars. Whether you get to keep that property or whether it’s sold off to pay creditors depends largely on whether that property is covered by federal bankruptcy exemptions. The amount of equity in your home and car can make a big difference.
If you’ve got too much equity, or are unwilling to let property go, a Chapter 13 may be your only choice. However, Chapter 13 is harder. You don’t want to race to choose it over Chapter 7 if existing exemptions will take care of the issue anyway.
Filing incorrectly can mean failing to get your discharge.
The Atlantic recently covered debtors in Memphis who have dug an even larger hole for themselves by filing for Chapter 13 multiple times, never successfully completing their payment plans or achieving a discharge. One advantage of Chapter 13 is your ability to file again if you need to, but it still doesn’t do you much good if you are unable to complete the process.
“Less than a third of Chapter 13 cases in the district result in a discharge of debts. And when their cases are dismissed, debtors are often in worse straits, because as they struggled to make payments, the interest on their unpaid debts continued to mount. Once the refuge of bankruptcy is gone, the debt floods back larger than ever. They’ve borne the costs of bankruptcy—attorney and filing fees, a seven-year flag on their credit report—without receiving its primary benefit.” [Emphasis ours].
Here at Sadek and Cooper we want you to receive the primary benefit of the bankruptcy filing, which is why we take the time to educate you as much as we possibly can even before you set foot into our office.
You may not be eligible for both kinds of bankruptcy.
Some people just won’t have a choice about what kind of bankruptcy they file because they can’t pass the means test. If you make too much money or have too many assets Chapter 13 bankruptcy is generally going to be your only choice.
If you start making major decisions on the notion that you’ll be filing for Chapter 7 you could create problems down the line. Be sure to discuss your financial situation thoroughly with your attorney so you are aware of which type of bankruptcy is legally open to you.
These are both good examples of why DIY bankruptcies are ill-advised.
A lot of individuals mistakenly think they can file a successful bankruptcy by filling out a bunch of forms they got off the Internet.
But even simple issues—something as simple as choosing the wrong type of bankruptcy—can send your life into a financial tailspin.
There is a reason lawyers are held to rigorous professional and educational requirements: nothing about the law is simple. Your best bet is to contact us for a free evaluation. We’ll work with you to put together a payment plan that makes sense, and you’ll save far more money in the long run than if you’d tried to DIY it. Call and make an appointment today. We’re ready to help you.