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Understanding Chapter 7 vs. Chapter 13 Bankruptcy in Denver: Which is Right for You?

Filing for Bankruptcy in Denver can be a complex and overwhelming process, but it can also offer a fresh start for individuals struggling with overwhelming debt.

When considering bankruptcy, understanding the differences between Chapter 7 and Chapter 13 is crucial in determining which option is right for your financial situation.

Chapter 7 Bankruptcy in Denver

Chapter 7 bankruptcy, also known as liquidation bankruptcy, is designed for individuals who have limited income and unsecured debts they cannot repay.

In a Chapter 7 bankruptcy, a trustee is appointed to sell non-exempt assets to pay off creditors. However, many assets are protected under state and federal exemptions.

Benefits of Chapter 7 Bankruptcy:

  • Quick Debt Discharge: Typically takes about three to six months to complete, offering a relatively fast process for debt discharge.
  • Fresh Financial Start: Once debts are discharged, individuals can begin rebuilding their financial lives without the burden of unmanageable debt.
  • Protection from Creditors: The automatic stay provided by Chapter 7 bankruptcy halts creditor actions, including collection calls and lawsuits.

Chapter 13 Bankruptcy in Denver

Chapter 13 bankruptcy, often referred to as a repayment plan or wage earner’s plan, allows individuals with a regular income to reorganize their debts and develop a three to five-year repayment plan.

Unlike Chapter 7, Chapter 13 does not involve selling assets.

Benefits of Chapter 13 Bankruptcy:

  • Debt Repayment Plan: Allows individuals to repay a portion or all of their debts through a manageable repayment plan based on their income and expenses.
  • Protection from Foreclosure or Repossession: Can help individuals save their homes from foreclosure or prevent the repossession of their vehicles.
  • Flexibility and Long-Term Financial Planning: Offers a structured repayment plan that allows individuals to catch up on missed payments and retain their assets while still maintaining a reasonable standard of living.

Determining the Right Choice for You

Choosing between Chapter 7 and Chapter 13 bankruptcy requires careful evaluation of your financial circumstances.

Factors to consider include income, assets, debt types, and long-term financial goals.

Chapter 7 may be suitable if:

  • You have a limited income and cannot afford to repay your debts.
  • Most of your debts are unsecure, such as credit card debt or medical bills.
  • You do not have substantial assets that would be at risk of liquidation.

Chapter 13 may be suitable if:

  • You have a regular income and can afford to make monthly payments towards your debts.
  • You have secured debts, such as a mortgage or car loan, that you want to catch up on and keep.
  • You have non-exempt assets that you want to protect from liquidation.
Consulting with a Bankruptcy Attorney in Denver

Navigating the complexities of bankruptcy law can be challenging, so it’s essential to consult with a bankruptcy attorney in Denver. An experienced attorney can evaluate your unique situation, explain the implications of each bankruptcy option, and guide you towards the best choice for your financial future.

Whether you choose Chapter 7 for debt discharge or Chapter 13 for a structured repayment plan, seeking professional guidance will ensure you make an informed decision that leads to a fresh financial start.

If you are filing for bankruptcy in Denver, Colorado call Berken Cloyes, PC today at (303) 623-4357 to schedule a free case evaluation.