Chapter 7 vs. Chapter 13

As we mentioned before, there are some differences between chapter 7 and chapter 13. Deciding which chapter is best for you will depend on your personal situation. Here at Arroyo & Associates, we will assist you in determining what is the best course of action for you. Call us at (301) 589-8852 to make an appointment and start your road to financial freedom.

Generally, many people are good candidates for Chapter 13 bankruptcy. If you are behind on your mortgage or car loan, and want to make up the missed payments over time and reinstate the original agreement, Chapter 13 may be for you. You cannot do this in Chapter 7 bankruptcy. You can make up missed payments only in Chapter 13 bankruptcy.

IIf a large part of your debt consists of federal taxes, what happens to your tax debts may determine which type of bankruptcy is best for you. Chapter 7 has some limitations on tax debts. If you cannot discharge your tax debts in a Chapter 7 bankruptcy, Chapter 13 may be a better alternative. There, you pay your tax debts over time.

If you have valuable nonexempt property. When you file for Chapter 7 bankruptcy, you get to keep certain property, called exempt (the state of Maryland has a list of what it considers exempt property.) If you have a lot of nonexempt property, which you would have to surrender if you file a Chapter 7 bankruptcy, Chapter 13 bankruptcy may be the better option.

There are other circumstances that may determine what type of bankruptcy to file. Arroyo & Associates will evaluate your individual situation and provide counsel and advice as to the appropiate course of action. Please call to schedule an appointment at (301) 589-8852.