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The Bottom Line on Chapter 7 and Chapter 13 Bankruptcy in San Diego

Learning about the intricacies of bankruptcy is certainly not an enjoyable task, nor is it an easy one. There’s a lot of information out there to wade through because so many people today are being forced to contemplate the possibility. To make it a little simpler, let’s pare it down to the basics.

For most people in financial straits, Chapter 7 bankruptcy is going to be the most obvious choice. If you or your spouse lost your job and are unemployed or underemployed, you will more than likely qualify for Chapter 7 (there’s an income “means” test to qualify for Chapter 7). After all, how can you repay your debt when you don’t have sufficient income or assets? This is why Chapter 7 basically wipes out credit card debt, medical debt, and other unsecured debt that typically drives people into bankruptcy. There are limits, though—Chapter 7 bankruptcy does not eliminate certain kinds of debt such as taxes, student loans, and child support obligations. Most people file their Chapter 7 bankruptcy as a “no-asset” case, get their debt discharged, and start rebuilding their lives.

On the other hand, if you have a regular income or you have assets to protect, but your financial situation has taken a real turn for the worse, then Chapter 13 bankruptcy might be an option for you. People with regular income might still need debt relief because they are only able to make payments toward debt they can reasonably afford. Chapter 13 offers an important advantage to those with relatively good incomes: the ability to restructure both secured and unsecured debts, cure delinquent payments over time, and protect their assets in the process. Chapter 13 also has special provisions that offer somewhat broader coverage than Chapter 7 does. For instance, Chapter 13 might protect co-signers and certain marital assets. It might also allow some relief from debts not otherwise dischargeable in Chapter 7, such as some lawsuit debts, some tax obligations, and some debts arising from property settlements in divorce or separation proceedings.

To learn more about which bankruptcy option is right for you, call attorney Kerry Denton at Denton Law Group at (619) 458-3739 today or fill out our online contact form.