Top 3 Reasons to File Chapter 13 Bankruptcy Instead of Chapter 7 Bankruptcy
TRI Writer • November 18, 2020
Are you filing bankruptcy? Are you unsure if you should file Chapter 7 bankruptcy or Chapter 13 bankruptcy? Friends and family may be advising you to file Chapter 7 bankruptcy so you can quickly receive a discharge of debt, but there are certain reasons that make filing Chapter 13 bankruptcy the right move.
Benefits of Bankruptcy Depend On Specific Life Circumstances:
Not everyone’s life and specific circumstances are the same; they may not even be similar. The vast differences between everyone’s life and circumstances can make comparing bankruptcy cases and benefits difficult. While Chapter 7 bankruptcy can be extremely beneficial, and many bankruptcy petitioners fall right inside the parameters that make them a good candidate for the liquidation bankruptcy, it is not the best choice in every situation.
Top 3 Reasons to File Chapter 13 Bankruptcy:
- Income: Bankruptcy petitioners with a high income are usually not eligible to file Chapter 7 bankruptcy. The intention behind bankruptcy is to provide relief to debtors who have impossible financial obligations. Chapter 7 bankruptcy is reserved for those who meet the means test and whose income is not sufficient to make the payments required for their debt. Generally speaking, if a bankruptcy petitioner has enough income to make their debt payments, they should consider Chapter 13 bankruptcy.
- Assets: When filing Chapter 13 bankruptcy, petitioners retain all their assets. The bankruptcy trustee for Chapter 13 bankruptcy cases does not have control of the petitioner’s assets like a Chapter 7 bankruptcy trustee. If a bankruptcy petitioner has nonexempt assets that they want to keep, they should consider Chapter 13 bankruptcy.
- Expected Future Debt: The bankruptcy codes protections are not limited to the current situation. In some situations, petitioners are seeking help not only for their current debt, but for additional debt they know is on the way and may arrive after they file bankruptcy. In a Chapter 13 bankruptcy, petitioners can convert their Chapter 13 bankruptcy to a Chapter 7 bankruptcy in the future and add additional debt that has occurred since their original filing. Bankruptcy petitioners whose life circumstances indicate they are likely to incur significant debt in the near future should consider filing Chapter 13 bankruptcy.
If you need to file bankruptcy , but you aren’t sure if you should file Chapter 7 or Chapter 13 bankruptcy, discuss your options with an experienced bankruptcy attorney. Don’t hesitate to call Ken Rannick at Kenneth C. Rannick P.C., Tennessee, and Georgia bankruptcy attorney. We help good people through bad times.
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Struggling with debt? Learn seven key signs that it might be time to consider bankruptcy. Kenneth C. Rannick P.C. offers legal guidance to individuals in Chattanooga ready for a financial fresh start.
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Are you a Tennessee resident facing financial challenges and considering bankruptcy? If so, you may have heard about a relatively new option called Subchapter 5 bankruptcy. But what exactly is Subchapter 5 and how does it differ from traditional Chapter 11 bankruptcy? More importantly, what benefits does it offer to individuals and small businesses? In this blog post, we will explore the world of Subchapter 5 bankruptcy and shed light on its advantages for Tennessee residents. Whether you're a struggling entrepreneur or an individual burdened by overwhelming debt, understanding the potential benefits of Subchapter 5 can help you make informed decisions about your financial future. What is Subchapter 5 Bankruptcy? Subchapter 5 is a relatively recent addition to the United States Bankruptcy Code, specifically designed to provide a streamlined and cost-effective bankruptcy process for small businesses and individuals. It was created as part of the Small Business Reorganization Act (SBRA) in 2019, with the aim of increasing accessibility to Chapter 11 bankruptcy relief. The Benefits of Subchapter 5 Bankruptcy Simplified Process: One of the key advantages of Subchapter 5 is its simplified and faster bankruptcy process. Unlike traditional Chapter 11 bankruptcy, which can be complex and costly, Subchapter 5 offers a more streamlined approach that is better suited for small businesses and individuals. Retention of Ownership: Under Subchapter 5, business owners have the opportunity to retain ownership and control of their company while developing a repayment plan. This allows for greater flexibility and the ability to restructure debts without losing ownership interests. Reduced Plan Requirements: Subchapter 5 eliminates certain stringent plan requirements that are typically associated with traditional Chapter 11 bankruptcy. This simplification of the plan process makes it more accessible to small businesses and individuals. Debt Repayment Plan: Subchapter 5 allows for the development of a debt repayment plan based on the individual's or small business's disposable income. This plan spans over three to five years, making it more manageable and achievable for debtors. Creditor-Friendly Approach: Subchapter 5 encourages creditor participation and collaboration, promoting consensual resolutions and a more amicable environment. This can lead to increased cooperation, reduced litigation costs, and ultimately, a more successful restructuring process. Subchapter 5 vs. Chapter 11 Bankruptcy: Understanding the Difference While both Subchapter 5 bankruptcy and traditional Chapter 11 bankruptcy share some similarities, there are significant differences between the two. The primary distinction lies in the complexity, cost, and requirements associated with each option. Subchapter 5 offers a more simplified and accessible bankruptcy process specifically tailored to the needs of small businesses and individuals, while Chapter 11 is better suited for larger businesses with more complex financial structures. If you're a Tennessee resident grappling with financial difficulties, Subchapter 5 bankruptcy may provide a viable solution. Its streamlined process, reduced plan requirements, and debtor-friendly approach make it an attractive option for small businesses and individuals seeking relief from overwhelming debt. Before making any decisions, it's essential to consult with a qualified bankruptcy attorney who can guide you through the process and help determine the best course of action for your specific situation. Remember, bankruptcy is not a one-size-fits-all solution, and the outcome will depend on various factors. However, understanding the potential benefits of Subchapter 5 bankruptcy can empower you to make informed decisions about your financial future. At Kenneth C. Rannick, P.C., we specialize in bankruptcy law and can provide the guidance and support you need during challenging times. Contact us today to schedule a consultation and explore your options for a fresh start. Take control of your financial future with Subchapter 5 bankruptcy. Let us help you navigate the path to a brighter tomorrow.