If you’re here, it’s likely because you’re facing tough financial challenges and need guidance. It’s completely normal to feel overwhelmed and confused when considering bankruptcy as a way out. At McCutchen Vaught Geddie & Hucks, P.A., we understand how difficult this time can be, and we are here to help. Whether you’re struggling with mounting debt, creditor calls, or the fear of losing your home, we want to make sure you understand the options available to you. Chapter 7 and Chapter 13 bankruptcy are two of the most common routes people take, but they each work very differently. Understanding these differences is the first step toward making an informed decision for your future.

What Is Chapter 7 Bankruptcy

Chapter 7 bankruptcy, often referred to as liquidation bankruptcy, is the quickest and most common form of bankruptcy for individuals who are struggling with overwhelming debt. In a Chapter 7 case, a trustee is appointed to sell off your nonexempt assets to pay back creditors. While this might sound intimidating, it’s important to note that most people who file for Chapter 7 keep the majority of their property. South Carolina allows certain exemptions that protect items like your home, car, and personal belongings, so you may not lose anything.

In exchange for the liquidation of certain assets, Chapter 7 allows for the discharge of most unsecured debts. This means that once the process is complete, you are no longer legally required to repay the debts that were discharged. This includes credit card debt, medical bills, and personal loans. Chapter 7 is typically completed within a few months, making it a faster way to get a fresh start. However, this option is only available to those who meet specific income requirements, so not everyone is eligible.

What Is Chapter 13 Bankruptcy

On the other hand, Chapter 13 bankruptcy is a reorganization bankruptcy. Unlike Chapter 7, where debts are wiped away after assets are liquidated, Chapter 13 allows you to keep your assets and create a repayment plan to pay off a portion or all of your debts over time. This plan typically lasts three to five years, depending on your income and the amount of debt you owe.

With Chapter 13, the court sets up a payment schedule that you can afford based on your income, living expenses, and other factors. Once your plan is completed, the remaining unsecured debts are discharged, giving you a path toward financial recovery. This type of bankruptcy is often beneficial for individuals who have valuable assets they want to protect, like their home or car. It can also be helpful for those who do not qualify for Chapter 7 because their income is too high or they have too many assets. Chapter 13 offers a structured way to catch up on overdue mortgage payments, car loans, or child support.

Key Differences Between Chapter 7 and Chapter 13 Bankruptcy

The most significant difference between Chapter 7 and Chapter 13 bankruptcy lies in the way they handle your debts. Chapter 7 essentially erases your debt by liquidating assets, while Chapter 13 gives you a chance to keep your assets and repay your debts over time through a structured plan. If you have little to no income and minimal assets, Chapter 7 may be the right choice, as it allows you to quickly discharge your debt and get a fresh start. On the other hand, if you have significant income or assets, or if you are behind on mortgage payments, Chapter 13 may provide a more manageable solution by allowing you to keep your property and restructure your payments.

Another key difference is the length of the process. Chapter 7 cases typically take only a few months to complete, while Chapter 13 cases can take several years. This means that while Chapter 7 provides quick relief, Chapter 13 offers long-term protection and a chance to rebuild your credit gradually. However, not everyone is eligible for Chapter 7, and those who are may not find it to be the best option based on their financial situation.

Eligibility requirements also differ between the two. Chapter 7 is generally available to those whose income falls below a certain threshold. This is determined by a means test that compares your income to the median income in South Carolina. If your income is above the median, you may be ineligible for Chapter 7 and may need to consider Chapter 13. Chapter 13 is available to individuals who have a steady income and can commit to a repayment plan, regardless of their income level.

Which Bankruptcy Is Right For You?

Deciding whether Chapter 7 or Chapter 13 is the best option for you depends on many factors. If you have significant assets, are behind on your mortgage, or have a regular income that allows you to make a structured payment plan, Chapter 13 may be the best fit. On the other hand, if you are overwhelmed by unsecured debt like credit cards and medical bills and have little to no assets, Chapter 7 may provide the quickest and most effective way to get a fresh start.

At McCutchen Vaught Geddie & Hucks, P.A., we understand how complex and emotional the bankruptcy process can be. We are committed to walking you through every step and explaining all of your options so you can make the best decision for your financial future. We know that filing for bankruptcy is not easy, but with the right legal help, you can successfully navigate the process and achieve a brighter financial outlook.

If you’re feeling unsure about which type of bankruptcy is right for you, or if you’ve already decided to file and need help with the process, we are here to assist you. Our team at McCutchen Vaught Geddie & Hucks, P.A. has helped countless individuals and families navigate the bankruptcy process and come out on the other side with a fresh start. We’ll guide you through each step, ensure your paperwork is properly filed, and protect your rights along the way. We understand the weight of the situation and will work with you to find the best solution.

If you are struggling with debt and considering bankruptcy, don’t wait. Reach out to us today, and we’ll work with you to find the best path forward. You don’t have to face this challenge alone. Let us help you achieve a successful case result with the right bankruptcy strategy tailored to your situation. Contact McCutchen Vaught Geddie & Hucks, P.A. now, and let’s start working together on your financial recovery.

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