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For many, benefits of Chapter 7 outweigh Chapter 13

California consumers who are struggling under heavy loads of debt should understand that there are resources available to ease that burden. Financial difficulties can be overwhelming, leaving many to feel as if relief is not an option. However, lasting debt relief is available by way of a Chapter 7 bankruptcy filing.

When considering personal bankruptcy, the vast majority of filers will choose between Chapter 7 and Chapter 13. Both offer their own benefits, but for many consumers, Chapter 7 will be the best choice. This is because filing for Chapter 7 bankruptcy can lead to the discharge of a majority of consumer debt, while Chapter 13 requires repayment of existing debt.

Under Chapter 13, consumers are given a three to five year period in which to repay their outstanding obligations. At the end of that timeframe, a portion of unsecured debt may be discharged, but only if the provisions of the repayment plan are fully met. If the filer is unable to repay the debt as planned, he or she loses the ability to have any debt discharged, and is left in a similar position to that at the onset of the bankruptcy filing.

On the other hand, Chapter 7 is a much swifter path to debt relief, taking as little as three to six months. At the end of that period, most California consumer debt is eliminated through discharge. Exclusions include child support, student loans, tax debt and secured debt such as an auto or home loan. There are income and assets requirements that must be met in order to file for Chapter 7, but for those who qualify, this option is often the best possible choice.

Source: Canon-McMillan, PA Patch, "Ask the Attorney: Is Bankruptcy the Answer For My Debt Problems? Maybe.," March 15, 2013

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