What are the factors that you should consider when you’re doing either chapter 7 or chapter 13?

Chapter 7 is usually done by people who have a lot of debt especially credit card debts, hospital debts, defaulted leases, rent, and other kinds of debts that you cannot afford to pay anymore because of health or employment issues. Most people who file a Chapter 7 do not have too many non-exempt assets. For example, in bankruptcy, you’re allowed to keep certain amount of assets. Anything more than that, you actually have to give it to a trustee so that he can sell it and pay your creditors even though the creditors may get pennies on the dollar. That’s the purpose of bankruptcy.  To be fair to you and to your creditors. Most people, unless they have a large monthly income from some source, are qualified for chapter 7. If not, with proper planning, we can qualify them in a few months or down the road whereas chapter 13 is filed by people who want to keep some of their assets. For example you may have a car worth $20,000 which is completely paid off. If you filed a chapter 7, the Trustee will take your car, liquidate it, and pay the money to your creditors. Whereas if you file a chapter 13, you can keep the car and just pay the value of that car without interest, without penalties over a period of 36 months up to 60 months to your creditors. So that’s the big difference is if you have assets, you need to file a chapter 13. If you don’t have assets, a chapter 7 would be perfect for you.