Deciding whether to file for Chapter 7 or Chapter 13 bankruptcy can be difficult if you do not know the difference between them. Knowing your options always works to your advantage.

A reason you may choose to file for Chapter 13 as opposed to Chapter 7 is because you are having trouble repaying your current debts, but want to be sure that you keep the option open for filing Chapter 7 in the event that you cannot stop acquiring new debt. Additionally, Chapter 13 may be your only option if you have filed Chapter 7 within the past six years. You may file for Chapter 7 again once the six years are up, but Chapter 13 is the alternative until then.

Another reason would be because you have valuable nonexempt property, which, under Chapter 7 bankruptcy, would be taken at the end of the filing process. Filing for Chapter 13 instead may prevent you from having to give up a lot of that property. For example, if you are behind on your mortgage or car loan, you'll have to give up the property or pay for it in full during your Chapter 7 bankruptcy case. In Chapter 13, however, you can repay the debts through your approved plan, and keep the property as long as you make the payments.

In filing for bankruptcy, "nondischargeable debts" are mentioned a lot. These are debts that cannot be wiped out and will remain in Chapter 7, but could be paid in full after filing for Chapter 13 plan. If not, in many cases, the remainder of the debt will be discharged. These debts include:

• Child support and alimony
• Student loans
• Tax debts
• Fines you were sentenced to pay for violating the law in such instances as traffic tickets, criminal restitution, and any debts you must pay as a result of personal injury you caused to someone else as in a DWI.
• Debts incurred as a result of any fraud or embezzlement you committed.
• Any loans, cash advances, or purchases made with credit for luxury goods or services over $1,075 within sixty days of filing.
• Any debts you forgot to list when filing your bankruptcy papers, unless the creditor hears about your bankruptcy case.

It is important to know what kind of debts you currently have in order to file for the correct and most beneficial chapter of bankruptcy given your situation. These kinds of matters are confusing, and we recognize that. If you have any questions, please contact our office for a free case evaluation and assessment of your options.