If you're unable to pay your bills, then you may be able to file for bankruptcy. As a consumer, you have two options for filing bankruptcy, chapter 7 and chapter 13. Which one you should use depends on a number of factors as well as your income and your assets. Both have the advantage of stopping creditors from making you pay everything in full, but both also have the disadvantage of having an effect on your credit. Here are the basic differences between the two so that you can determine which might be better for you.

Reasons to File Chapter 7

If your debt is overwhelming enough that you just can't see yourself paying it all or most of it, then chapter 7 might be the right choice if:

  • You don't own a home or vehicle as you may not be able to keep them

  • You have a lot of unsecured debt, such as medical bills and credit cards

  • You need relief as soon as possible

  • Your income is too low or irregular

The main advantage to chapter 7 bankruptcy is that you will not have to make monthly payments and you can wipe out things like credit card debts. The downside is that you may lose important things like your home and your car. However, if certain conditions are met, or you live in certain states, you may be able to keep these items so long as you can continue to make the payments.

Reasons to File Chapter 13

With chapter 13, you agree to make payments on your debt over a certain length of time. After that time period ends, much of the remaining debt may be wiped out. Chapter 13 might be better for you than chapter 7 if:

  • You have a home or automobile and you are behind on payments

  • You want to pay off your debts, but need to make smaller payments

  • You are employed and capable of making payments

  • You want to keep more of your possessions

Another advantage to chapter 13 is that there are no limits on how many times you can file, though it does show up on your credit record each time. A major disadvantage is that you have to put all your discretionary income into your payments. This means that you will not be able to spend any money on anything other than basic expenses.

Not all debts can be discharged by bankruptcy, but an attorney can help you determine a course of action with those. If you want to know more about bankruptcy and how it can help relieve your debt burden, then contact a bankruptcy lawyer to help you make the decision and file the paperwork. Check out sites like http://timgeorgelaw.com to get started.