The answer to that question is very difficult. I am often asked by clients, “Do you suggest I file?” “Would you file if you were me?” My basic rule of thumb is this if you feel that you can bail yourself out of debt within a six month time period then there is no reason to file a Chapter 7 bankruptcy.
If on the other hand, at the end of six months if you as the client are still drowning in debt, if you have barely made a dent in the amount that you owe creditors, if the interest is piling up upon itself, if you are still being harassed by creditors to the point where you don’t feel you’re going to be able to function properly, and your mental, physical, and spiritual health is hurting; then I would certainly recommend a Chapter 7 bankruptcy to receive a fresh start.
As far as Chapter 13, if you as the client have available money beyond your expenses each month, then I would recommend you do a Chapter 13, and repay either all or a portion of your debt over time. Chapter 7 is the fresh start, which is made available to honest debtors who do not have the ability to pay; so if you have the ability to repay, Chapter 13 is what I would recommend.
Now this doesn’t mean that all of your creditors get paid back 100 percent in a Chapter 13 case; it just means that they get paid back a percentage of what you owe them. The payment plan has to last anywhere from 36 to 60 months, and the dollar amount that’s paid back can be anywhere from 10 percent to 100 percent. So it’s a personal question, it’s a personal answer, and one needs to do a little soul searching to determine whether or not they want to avail themselves of the fresh start under Chapter 7 or take advantage of the Chapter 13 reorganization laws, and repay either 10 percent or all of their debt over a period of three to five years. It really depends on one’s income, one’s expenses, and of course the total amount of debt.
The Maryland Bankruptcy Center files Chapter 7 bankruptcy and Chapter 13 bankruptcy for consumers throughout the state of Maryland. If you would like a free consultation, call today at 1-800-NEW-START.
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