The decision to file chapter 7 or chapter 13 bankruptcy depends on several different factors. In some cases a debtor may be better of filing a chapter 7 and in others a chapter 13 may be a better option. In either event what you qualify for may determine if you file a chapter 7 or a chapter 13 bankruptcy.
Do I Qualify For Chapter 7 Bankruptcy:
To qualify for a chapter 7 bankruptcy there are several requirements that must be met.
- The biggest factor that decides if you should File Chapter 7 Or Chapter 13 Bankruptcy is your income. To qualify the debtor can not have an income that exceeds the median income for the size family you have. An example is; if you are a family of one and you seek to
file a chapter 7 you can not earn in excess of $47000.00 per year. For those debtors that have suffered a recent loss of income, their yearly income is calculated by using the last 6 months of income. This last 6 months is multiplied by 2 giving us a yearly annualized individual income for the purpose of the means test. - For the debtor to qualify for chapter 7 the debtor cant have filed a chapter 7 for eight years before the latest filing. The time is measured from the date the debtor last filed the case until the date the next case is filed.
- The debtor must have lived in the State of Oklahoma for six months before filing.
Is Chapter 7 Better Than Chapter 13 Bankruptcy:
From the point of view of the debtor its always easier to file a chapter 7 than to file chapter 13. The main reason is that in a chapter 7 the debtor is given a fresh financial start. This means that unlike a chapter 7 that wipes out most of the unsecured debt, the chapter 13 requires the debtor to make payments on the unsecured debt for a period up to 60 months.
In addition to the ease of filing a chapter 7 the chapter 7 is much less expensive to file. Typically chapter 7 bankruptcy attorneys charge from $1300.00 up to about $1850.00 to file a chapter 7. This fee includes the courts filing fee and all other costs. Both the attorneys fees and the Trustee fess are much more in the case of a chapter 13. The attorneys fee and filing fee are up to $3500.00 in a chapter 13 case. In addition to this fee the Trustee in the case will also charge a percentage of the total debt that is being administered.
When is a Chapter 13 Better Than a Chapter 7 Bankruptcy:
- Of course filing a chapter 13 is better than a chapter 7 in those cases in which the debtors don’t qualify for a chapter 7. As is shown
above, this includes times when the debtors income is to high or when its not been long enough since the repeat filing. - Another reason to file a chapter 13 is when the debtor owns a home and the debtor is behind on the payments. In this case the debtor can avoid a foreclosure by filing a chapter 13. The debtor will be able to keep the home out of foreclosure so long as the late payments are made over the course of the chapter 13 plan. In this case the debtor must be able to pay 100% of the late payments within the maximum 60 months of the chapter 13 bankruptcy.
- If you file Chapter 7 or Chapter 13 depends on if you have non-exempt assets. Exempt assets are not subject to the power of the bankruptcy court while non-exempt assets may be taken and sold to satisfy the claims from the unsecured creditors. An example of some exempt assets include your home, car, retirement accounts and personal property. In many cases a chapter 13 will allow you keep your non-exempt assets so long as your chapter 13 repayment plan pays unsecured creditors at 100%
