Knowing the benefits of each may be a contributing factor in your decision. However, the best way to know which is right for you is by consulting a bankruptcy attorney because there are requirements you must meet for each type.
Chapter 7 wipes out most of your obligations to repay unsecured debt and is best if you do not have many or high-value assets.
- You eliminate most debts: Chapter 7 does not require you to pay anything to most creditors. Exclusions include child support and recent taxes.
- You can take advantage of state exemptions: Although you can only retain some types of property, other assets may have protection under Illinois exemption laws.
- You finish the process sooner: Your case is usually over within a few months, whereas with Chapter 13, you have a commitment to a repayment plan for three to five years.
It is important to note that your income may be too high to qualify for this type.
Chapter 13 entails a plan to repay a portion of unsecured debts.
- You get to keep your property: Unlike Chapter 7, you can keep more of your assets because you are still paying for them.
- You learn better money management: Following a plan and sticking to a strict budget will help you prevent going bankrupt again.
- You can rebuild your credit faster: Chapter 13 stays on record for a minimum of seven years, but you can qualify for secured credit cards within months and for loans in under two years. Making on-time payments will help raise your credit rating.
No matter which you file for, bankruptcy also puts an immediate end to creditor harassment, repossessions and wage garnishment. Bankruptcy may be frightening or stressful, but it gives you a fresh financial start, and the negative consequences will not last forever.