Many people in South Carolina are finding themselves grappling with increasingly overwhelming amounts of debt. If you include yourself among them, you may be wondering whether you have any realistic way of paying off those debts and achieving financial stability. If you do not see a realistic way to repay your outstanding debts within the next few years, it may be time to start thinking about filing for bankruptcy.
Per Rocket HQ, consumers who file for personal bankruptcy typically do so through either a Chapter 7 or a Chapter 13 filing format. There are a number of key differences between the two types.
Chapter 7 bankruptcies
Chapter 7 consumer bankruptcies are more common than Chapter 13 filings, but you have to meet certain income requirements to move forward with this type of bankruptcy filing. You need to pass a means test proving that you have limited assets and resources available to you, and if you do, you may move forward with Chapter 7 bankruptcy proceedings. In a Chapter 7 bankruptcy, you may need to sell off some of your assets to pay back some of your debts.
Chapter 13 bankruptcies
If you are unable to qualify for a Chapter 7 bankruptcy, or if you do not want to risk turning over your home or other valuable assets, a Chapter 13 bankruptcy may suit your needs. In a Chapter 13 filing, you typically agree to pay back a portion of what you owe over a three-to-five-year period. If you do so, any remaining debts you have typically undergo discharge.
Chapter 7 and 13 bankruptcies also differ in terms of how long they impact your credit score. A Chapter 7 filing affects your credit for 10 years, while a Chapter 13 filing does so for seven years.