Richard J. Shurtz, Attorney at Law

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May 2018 Archives

Chapter 7 and Chapter 13 provide different bankruptcy remedies

One important issue that is always discussed in the first meeting with a consumer bankruptcy attorney in Washington is whether to file Chapter 7 or Chapter 13. Several other critical issues must be evaluated at the same time, including whether the individual or married couple are qualified under the means test to file a Chapter 7. Generally, one who makes too much money to file a Chapter 7 bankruptcy will still likely be qualified to file a Chapter 13.

Chapter 7 bankruptcy is the strongest debt relief remedy

In Washington and elsewhere, when the economy is relatively healthy and credit somewhat easy to obtain, people tend to get carried away with credit card charges. Indeed, the pressures of intensive product marketing have a great influence in encouraging people to continually buy consumer products. These societal factors play a key role in keeping unsecured debt burdens skyrocketing among many consumers. It is only after the financial abilities of the consumer to repay become depleted that the creditor takes on a new face, a much more demanding and fearful face. This sets the stage for many persons to select bankruptcy as the best way to resolve the problem and start over. 

Chapter 7 bankruptcy is a powerful way to erase consumer debt

In Washington as elsewhere, two broad categories of bankruptcy filings that are most often used are those for businesses or for consumers. Chapters 7 and 13 are used most often for consumer filings whereas businesses commonly make use of Chapter 7 and Chapter 11. The dichotomy is sometimes described as the difference between a business filing and a personal bankruptcy.

Bankruptcy filing must meet "means test" standards

Most people in Washington and throughout the country find it compelling to file for consumer bankruptcy relief due to losing a job, incurring massive medical debt, marital dissolution or taking on huge credit card debt. When the debt is in the foregoing categories and is unsecured, Chapter 7 is usually the remedy sought because unsecured debts are erased absolutely and permanently in that kind of filing. Changes to the bankruptcy laws in 2005 now make it more difficult, however, for an individual or married couple to be approved for a Chapter 7 filing.

Better credit may come sooner after a Chapter 13 bankruptcy

After completing a bankruptcy in Washington or other states, the individual or married couple may have a difficult time obtaining a reasonable credit card and other reasonable extensions of credit. For a Chapter 13 payment plan, the negative report of a bankruptcy can remain on one's record for up to seven years after discharge. There are many ways to build up one's credit rating, however, and in some instances, it is found that the bankruptcy itself ceases to be reported at some time less than seven years. In any event, with focus and some hard work, one can restore a very respectable credit score within a few years after the discharge.