Filing for bankruptcy can be confusing. You may be wondering, “Should I fill out Chapter 7 or Chapter 13 bankruptcy forms?” When you think of bankruptcy, you may assume that you fill out the application forms and walk away without paying off any of your debts. As you may have heard, you are liable to lose personal belongings like boats, cars, heirlooms, inheritances, guns, musical instruments or other expensive items. This is known as Chapter 7 “Liquidation” bankruptcy. On the other hand, Chapter 13 bankruptcy is better for people who are worried their homes may be lost to foreclosure. Perhaps you are still a wage earner and you have assets you don’t want to lose. You may still be eligible for file for Chapter 13 bankruptcy, which is similar to a consolidation loan.

Generally speaking, to be eligible for Chapter 13 bankruptcy forms, you must have unsecured debts of $336,900 or less and secured debts (including homes, cars, etc) of no more than $1,010,650. You will not be eligible if you’ve filed for any chapter of bankruptcy during the past 180 days or if your previous petition was dismissed due to your failure to appear in court. Consumer law mandates that most people filing for bankruptcy attend some form of credit counseling within 180 days before filing. In some instances, you may find other alternatives, like filling out debt management payment forms, instead of filing for bankruptcy, which will not have such negative repercussions on your credit report and financial future.

Chapter 13 is much like a consolidation loan, where you pay a trustee each month, who then pays off your individual creditors. Legal professionals often recommend this plan for most people because your personal assets are protected and it encourages you to manage your debts more responsibly. However, if you literally have nothing or you’re unemployed, then you will need to file for Chapter 7 liquidation rather than file Chapter 13 bankruptcy forms. In Chapter 7, you will not have any further debt repayment obligations, but you may lose some of your expensive possessions to a court-appointed trustee who will use the proceeds to recover some of what you owe.

Once you fill out your Chapter 13 bankruptcy forms, you will meet with your trustee and your creditors within 20 to 60 days of your petition. You will swear under oath that what you say is true and you’ll work on coming up with a reasonable plan of action. In some cases, the creditors will have objections and may have proof that you signed up for credit knowing you would never pay the money back or that you have hidden assets. If they level these charges against you, consumer law mandates that they provide proof. In almost all cases, the creditors file no objections and the bankruptcy goes through. You will then be set up on a payment plan that you can repay.

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