How dodetermine which kind of bankruptcy to file for?

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How dodetermine which kind of bankruptcy to file for?

I have been in and out of the hospital for the past 2 years. I have fallen behind on all credit cards and hospital bills. I have a house that I am buying and a car under lease which I have to turn in in February of next year. Would I have to pay anything back? I owe over $25,000 in credit and hospital bills. All bills have been sent to collections (they call all day and night until 9:30 pm). Chapter 7 or Chapter 13?

Asked on October 18, 2010 under Bankruptcy Law, Texas

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

The decision of whether to file bankruptcy and, if so, which kind to file is complex; you should consult with a bankruptcy attorney if at all possible. As a general rule, since Ch. 7 is a "liquidation" bankruptcy, it's less desirable for people with substantial assets--though it does have the advantage of a quicker discharge (once the liquidation is done). Ch. 13 does not require the liquidation of assets, though it has certain eligibility requirements (which you probably should meet); it does, however, require you live under a strict, court determined budget (the "plan") for  at least 3 and usually 5 years before debts are discharged. With a primary residence, if there's a mortgage, under either type, you have to keep paying the mortgage or lose the house (though the lender can't then also sue you for the remaining balance on the loan). Here is a link to some well-written bankruptcy facts put out by the federal government; good luck: http://www.uscourts.gov/FederalCourts/Bankruptcy/BankruptcyBasics.aspx


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