Both main branches of bankruptcy offer benefits and advantages to those who use them, but one branch is likely more beneficial than the other. When you meet with a bankruptcy lawyer for the first time, the lawyer will discuss the two branches with you and will aim to determine which is the right choice for you. How do lawyers do this, you may wonder? They do this by examining the following three factors about your financial situation.
The primary factor that plays a role in choosing which bankruptcy branch to use is your income. The income you earn will qualify you to use both branches, or it will limit you to use only one of the branches.
If you earn a lot of money and more than the average person in your area, then you cannot use Chapter 7. You would only be able to use Chapter 13. If you earn less than the average, you could use either option. However, if you do not have a lot of income, you might not be eligible to use Chapter 13. Chapter 13 requires a repayment plan and, therefore, requires proof of steady income.
Bring your pay stubs and tax returns to your visit so your lawyer can tell you which branches you qualify for.
The next factor that plays a role in this decision is your debts. What debts do you have right now? Do you have student loans, IRS tax debts, and child support obligations? If so, your lawyer might suggest using Chapter 13, as it provides relief for these debts. Do you owe money mostly on credit cards? If this is the case, your lawyer might suggest using Chapter 7, as this would be the best option for this situation.
Other Situations You Face
Your lawyer may ask about other situations you face to help provide you with the right answer. For example, are you facing foreclosure on your home? Are you worried your car lender will repossess your vehicle? If you face these situations, using Chapter 13 is often the right solution as it helps with situations like these.
After a lawyer reviews these things, he or she can tell you which branch is the right choice. If you would like to learn more about bankruptcy, schedule a consultation visit with a bankruptcy attorney today. You can learn about the branches available, as well as the option that is right for you.