Bankruptcy In Hagerstown: Chapter 7 & Chapter 13


If you are reeling under extreme financial distress or have too much debt that you are unable to repay, you may want to consider bankruptcy as an option. Let’s start by saying that bankruptcy is not the only choice for debt relief. You can consider other options, but if nothing else looks viable, bankruptcy could be a good way to reduce the burden. Talking to a bankruptcy attorney Hagerstown, MD can help you understand and evaluate your circumstances. In this post, we are sharing more about Chapter 7 & Chapter 13.

Knowing the differences

People often have their confusions about Chapter 7 & Chapter 13. Firstly, it is important to understand that Chapter 7 bankruptcy is liquidation, while Chapter 13 is more of a reorganization. Chapter 7 is available for both individuals and businesses alike, while Chapter 13 is only for individuals. To qualify for the former, you must pass the Means Test, and your disposable income will determine if you can consider Chapter 7. Think of Chapter 13 as a reorganization of your financial situation, and therefore, you have to adhere to the decided payment plan.

Pros and cons of Chapter 7

Chapter 7 is a good choice for people who do not make too much money. You can expect to get immediate relief, as your creditors cannot chase you for payments anymore. Most unsecured debts and unpaid dues can be discharged, and you could even retain your home and car. The whole process only takes a few months, and you have a clean slate. However, Chapter 7 will impact your credit score and doesn’t discharge some debts. For instance, if you are required to pay for child support, you will have to do so even after filing for bankruptcy.

Pros and cons of Chapter 13

Discharging your debts takes considerably longer with Chapter 13 bankruptcy, but you could potentially retain most of your assets. New lines of credit could be availed after three years, although the interest rates would be considerably higher. You can start rebuilding your credit almost immediately, and it is a good option for people with considerable disposable income. However, you cannot discharge some debts with Chapter 13, including student loans.

Each person’s situation and financial circumstances are unique, and therefore, it is wise to work with an attorney. Talk to local bankruptcy lawyers and get their advice on Chapter 13 and Chapter 7 to make the right choice.

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