If you have no other choice and need to file bankruptcy, which is better chapter 7 or chapter 13?

Question

After trying to find ways to be able to take care of our responsibilities we have come to the last resort and that is to file bankruptcy. We don't own any homes or any real property. what I am curious about is which is better chapter 7 or chapter 13. We want to be able to start saving a soon as it done and when feesible start rebuilding credit. Our credit card debt is only $1200 which is a lot, but it could be worse. We just had two bad years with this one being the worse. I am looking for advice on the best way to go between the two. Chapter 7 or Chapter 13 and why.

We are not happy about doing this as we have tried everything. We don't have anything of value and we have tried to pawn stuff but couldn't get $25.00 for most. We live very modestly. So please do not answer this question if you are going to be negative.

Thank you so much. We want to do the right thing so we can start over and never have to do this again.

Thank you so much for all that has given advice so far. I guess I need to add just a few details to make the situation clearer.

As I stated it has been a bad 2 years, actually almost 3 years. I got real sick and had to leave my job and am now on disability. My husband took on a second job a year ago. He pays child support. Between the two of us we have 5 kids between the ages of 9-16. We have two vehicles, which one is in the shop. We also are surrendering this vehicle.
We have an attorney and he is recommending chapter 13. I (we) have a lot of medical bills. After I had to leave my job I couldn't afford the cobra payments for continued health insurance. To maintain health insurance with my husbands employment (state worker) would have cost more than the cobra payments.
My ex- husband filed bankruptcy and I did not know that anything he had when we were together, came back to me.
I never thought I would get sick and have to quit work. I was not prepared.

Answer 1

I would strongly advise against it with only $1200 in debt, i looked into it awhile back, youll have to sell any assets you have, cars, boats, whatever, and ruin any chance for regaining your credit fast. So, if you both get a second job, it will seriously take no time to pay that off, and youll be back on your feet in no time, if your convinced that wont work, look in the phone book under bankruptcy, and set up an appt, with a lawyer, they will tell you everything you need to know.
just a last note: another option to try is http://www.prosper.com/

Answer 2

This is not ment to be negative, but it is just some realities of what you are considering. If you have only $1200 in debt, bankruptcy is not what you want to do. It will cost you at least that much, and probably more, to even file for a bankruptcy. So it would be more of an advantage to you to work on your debt than trying to pay for the bankruptcy.

Also, with the bankruptcy laws that were changed a couple of years ago you don't really have a choice as to if you can file a Chapter 13 or Chapter 7. There are specific guidelines as to who can file a Chapter 7 and if you don't qualify you will be forced into a Chapter 13. If you went with a Chapter 13 they look at your income and determine a repayment plan. But for that low of a debt, you probably can get the same payments by working with your creditors on your own, without the bankruptcy.

Answer 3

Seems to me that your debt is not that large at all and filing for bankruptcy is an easy out with dire consequences later, ie. higher interest rates on any and all credit purchases for years.

5 Years ago I was far more in debt than you seem to indicate here. I am talking over 150,000 grand. Now I did sell my home but still had over 25 grand to pay after that. (I had divorced and my ex wife gets alimony) I started paying my debts concentrating on the biggest ones first. I also elliminated any nights on the town or buying anything extra at the store. It by no means has been easy but I can tell you today I have only about 2 grand left to pay and that will be gone by the first of the year. I did not file backruptcy of any kind even though my ex that lives rent free, utility free, and collects money from me did file and got it.

You do not have to file bankruptcy. I am assuming since you said we that there are two of you. Correct? Are you both working? Try this first. Track every single dime you spend for a month. Every last cent. If you do not know where it is going, you have no clue where it is being wasted or lost. Call your creditors and work out a reasonable payment plan and stick to it. Cut the cards in half! Borrowing from peter to pay paul will never work.

If an drunkin bum can climb out of the gutter surely you can.

Good luck either way.

Answer 4

You don't really get to chose. You have to qualify. You should find a bankruptcy lawyer to explain.

However, if you only have $1200 of debt, I'm pretty sure you won't be able to file either. A part time job and a strict budget would get that small amount paid off in a couple months.

Answer 5

Bankruptcy chapter 7 is where you don't pay anything back but they come and get your stuff.
Bankruptcy chapter 13 is where you get to keep your stuff and you pay a monthly payment based on your income.
I found interesting information about your answer & options here. (this article: Personal Bankruptcy, the myths and facts:)
http://all-debt-consolidation-loan.blogspot.com/2007/08/personal-bankruptcy.html Good luck!

Answer 6

how much total debt do you have?? medical bills, loans, creit cards??? 1200 is not a lot at all. the filing fee for bankruptcy is 299.00 and that doesnt even include attorneys fees.

Answer 7

1200 isn't alot. call your credit card and work it out with them.
good luck!