Is it preferable to file a Chapter 7 Bankruptcy or a Chapter 13 Bankruptcy?
Transcript:
There are two main kinds of bankruptcies that people consider when they're thinking about filing for bankruptcy. The easiest, most straightforward bankruptcy that most people probably are thinking of when they're thinking about filing for bankruptcy, the Chapter 7 bankruptcy. In the Chapter 7 bankruptcy, we're talking about a liquidation, and a liquidation involves the sale of any assets that a debtor owns that cannot be protected. Now, in Nevada, we have very generous laws and many assets of a debtor can be protected, so in many instances, a debtor can keep virtually everything that they own and still file for a Chapter 7 bankruptcy. The process takes about three to four months, but there are some limitations on who can file for Chapter 7 bankruptcy. An individual that makes too much money is not allowed to file for Chapter 7 bankruptcy. They have to pass what's called the "Chapter 7 Means Test," and the Means Test basically boils down to whether or not this person has enough disposable income on paper to repay their creditors. If so, they probably belong in a Chapter 13 bankruptcy.
The Chapter 13 bankruptcy is the other main kind of bankruptcy that we usually encounter when we're speaking with potential clients. It involves monthly payments to your creditors, and the amount that you pay on a monthly basis depends in part on how much money you make and in part on what kinds of debts that you have. There are some other considerations that definitely go into which chapter of bankruptcy is most appropriate for an individual thinking about filing for bankruptcy, and there's definitely some situations in which you may want to avoid filing for one chapter or the other. I strongly recommend that you meet with a qualified and experienced bankruptcy attorney who can give you good advice on which chapter is best for you to get you the best possible result for your situation.
