Many Connecticut residents and others all across the nation are struggling with their finances. Despite an improving economy with lower unemployment, high levels of debt create a significant strain to a great number of families. Some consumers may decide that filing for bankruptcy is the decision that can help them start afresh and get their finances back in order. However, it may be difficult to determine whether to file for Chapter 7 or Chapter 13 bankruptcy.
Chapter 7 bankruptcy is focused on liquidating the consumer’s nonexempt assets and paying off the debts. A means test must be passed by those who file for this type of bankruptcy, taking into account the income of the person filing. Types of assets that may be liquidated include cash, a home and car. This bankruptcy type is most appropriate for those consumers with little income or assets. A Chapter 7 bankruptcy can affect a credit score initially, and will stay on a credit report for up to 10 years.
Chapter 13 bankruptcy is known for setting up a plan to repay debts over a specified period of time, typically three to five years. Typically, one payment is made to a trustee, who then pays creditors. Chapter 13 works best for those consumers who have gotten somewhat behind in making payments but still earn a sufficient income. This type of bankruptcy stays on credit reports for up to seven years.
Facing a mountain of debt may seem insurmountable; however, a Connecticut bankruptcy attorney can help. An experienced lawyer will help consumers evaluate their options, including Chapter 7 or Chapter 13 bankruptcy, and determine the best course of action. The goal will be to get clients back on the right track with their finances.