budgeting debt

Chapter 7 & Chapter 13: Which Type of Bankruptcy Is Right for Me?

Bankruptcy is a viable solution for many people who are facing worrisome debt. Whether you can’t make ends meet or you need to restructure your debt to make payments more flexible, bankruptcy can help you. Since everyone’s debt situation is unique, bankruptcy isn’t a one-size-fits-all solution. Our Irvine bankruptcy lawyers explain the difference between Chapter 7 and Chapter 13 bankruptcy to help you decide which bankruptcy is right for you.

If you need help with your bankruptcy case, contact our Irvine bankruptcy attorneys today at to schedule a consultation!

Chapter 7 Bankruptcy

Chapter 7 bankruptcy is the most common type of bankruptcy filed because it erases most debt in only a few months. Once a person files for Chapter 7 bankruptcy, their debt liability is removed. This means that creditors can no longer hold them accountable for debt payments. As a result, creditor harassment and wage garnishment end. Chapter 7 bankruptcy is for people who know they won’t have the funds to pay their debts, and they are struggling to make ends meet.

This type of bankruptcy will help you achieve financial relief as quickly as possible. In some cases, your debts could be discharged in as little as two to three months. However, it’s important to note that you won’t be able to use credit cards while the bankruptcy is pending.

Below are the categories of debt that can be erased with Chapter 7 bankruptcy:

  • Credit card debt
  • Medical bills
  • Business debts
  • Personal loans
  • Student loans
  • And more

Chapter 7 bankruptcy only discharges unsecured debt. Unsecured debts don’t give lenders the right to any collateral for the debt. So, if you fall behind on payments, they can’t claim your assets to repay your debt the way they can with secured debts (like with car payments).

Chapter 13 Bankruptcy

Chapter 13 bankruptcy doesn’t discharge your debt as quickly as Chapter 7 debt. Chapter 13 was created to allow people to consolidate all their debt into a single monthly payment plan. All your unsecured debt is combined into one payment plan that works for you. The payments are then made to a court-appointed trustee who disburses the payments to your creditors. An attorney can work with the court on your behalf to create a repayment plan that is manageable for you by analyzing your other expenses and total income.

If the court finds that you are eligible for Chapter 13 bankruptcy, the repayment plan will be in effect for three to five years. The benefit of Chapter 13 bankruptcy is that you get to keep most of your assets. You won’t need to surrender your home or car as long as you make payments, and you will be legally protected from creditor harassment during the payment period. Once you complete your repayment plan, the remaining debt will be discharged.

Below are the categories of debt that can be erased with Chapter 13 bankruptcy:

  • Credit card debt
  • Medical bills
  • Older tax obligations
  • Personal loans not secured by collateral
  • Breach of contract or negligence related debt
  • Debts incurred to pay nondischargeable taxes
  • Debts arising out of divorce or separation property settlement
  • And more

Call Our Irvine Bankruptcy Attorneys: (949) 570-5025

At McFarlin LLP, we provide reliable, high-quality legal services to every one of our clients. If you’re facing overwhelming debt and you think bankruptcy will help, our team can help you determine which bankruptcy is right for you. Communication and honesty are some of our firm’s most important values, which clients notice from our very first conversation. We make sure to carefully consider our clients’ needs and formulate an appropriate and cost-effective legal strategy to reflect their goals. We also work hard to keep clients informed and updated on their matter every step of the way. We aim to make bankruptcy easier for you with $0 down upon filing.

Let us help you achieve financial freedom by calling us today at (949) 570-5025 to schedule a consultation!