When individuals are deciding to undertake the process of bankruptcy, it is important to plan carefully. Bankruptcy offers many advantages, and the main one is a fresh start. However, there are multiple ways to go about organizing your future financial life with a bankruptcy. The first is to decide if you are going to file a Chapter 7 bankruptcy or a Chapter 13 bankruptcy. According to Credit Karma, depending on your current amount of disposable income, the decision between these bankruptcies may be made for you.
Essentially, you are only eligible to file for a Chapter 7 bankruptcy if you are able to prove to the courts that your amount of disposable income is too low to try a Chapter 13 bankruptcy. In a Chapter 7 bankruptcy, your debts will be legally expunged, but it is highly likely that you will lose assets like your car or home in compensation.
In the event that you have too much disposable income on hand to qualify for a Chapter 7 bankruptcy, then you will need to file a Chapter 13 Bankruptcy. A Chapter 13 bankruptcy is more like an extended debt repayment plan. One of the benefits to a Chapter 13 bankruptcy is that you are going to be able to keep your assets throughout the process, but one of the negatives is that it often takes a lot longer to get through a Chapter 13 bankruptcy process as compared to a Chapter 7 bankruptcy process. Chapter 13 bankruptcies also tend to be less severe when on your credit report as compared to a Chapter 7.