Should You Always File for Chapter 7 If You Qualify?

July 31, 2024 By: Carrie Weir

When Should You Opt for Chapter 13 Instead?

When you’re considering filing for personal bankruptcy protection, you have two basic options. You can permanently discharge debts through Chapter 7, or you can restructure your debts (make new payment arrangements) under Chapter 13. You must, however, qualify to file a Chapter 7 petition. You might think that anyone who qualifies for Chapter 7 should automatically choose to permanently discharge their debts. Wouldn’t you rather be free of any further obligation? Is there any reason why, even though you are eligible to rid yourself of debt through Chapter 7, that you might elect instead to reorganize your debts through Chapter 13?

How a Chapter 13 Bankruptcy Might Be in Your Best Interests

In most states, the most compelling reason for choosing a Chapter 13 bankruptcy over a Chapter 7 is the effect on your property. In almost every state other than Texas, bankruptcy exemptions are fairly limited, so when you file for protection under Chapter 7, you have to relinquish a significant portion of your assets to the bankruptcy court. In those states, if you want to keep your property, you’re better off seeking to renegotiate your debt with creditors, as you won’t risk the loss of property.

In Texas, though, the state bankruptcy exemptions are such that most people can discharge their debts without the loss of any property. Accordingly, there’s typically no reason to file a Chapter 13 bankruptcy when you qualify for a Chapter 7, unless you simply want to repay your creditors. Of course, if you have valuable property in Texas that will not be protected by the state exemptions, a Chapter 13 petition can allow you to keep it.

Contact an Experienced Rockwall, Texas, Bankruptcy Attorney

Let us help you take the right steps and make good decisions when filing for personal bankruptcy protection. At the Law Offices of Carrie Weir, all potential clients are entitled to a free initial consultation. To arrange an appointment, contact my office online or call 972-772-3083. I handle Texas personal bankruptcy filings in Kaufman County, Rockwall County, Collin County, Dallas County, Hunt County, and the surrounding counties.