If you have debts that are in default or debt payments you cannot keep up with, filing for either Chapter 7 bankruptcy or Chapter 13 bankruptcy might be a good option for you.

In this Low Cost Legal guide we will explain what your responsibilities will be once you file under each of these forms of bankruptcy.

It is always best to contact a bankruptcy attorney and ask questions before making a bankruptcy decision. Most attorneys offer a free consultation, take advantage of the information you gather.

Chapter 13 Bankruptcy: How Much You Have to Pay Back

Under chapter 13 bankruptcy, you will have to pay back the debts you owe, though you might be able to pay them back at an interest-free rate or at least a lower interest rate. You will also be given a lengthy period of time to do this, based on your ability to make these payments. This type of bankruptcy allows you to restructure your debts and the payment schedule for repaying them. Chapter 13 bankruptcy does less harm to your credit rating than chapter 7 bankruptcy.

Chapter 13 is for those with a good income and not too much debt to be able to recover from. It allows you to keep property such as a home that you don’t want to lose.

Chapter 7 Bankruptcy: How Much You Have to Pay Back

Under chapter 7 bankruptcy, all of your unsecured debts are discharged and you pay nothing back on them. Unsecured debt is that which is not attached to any real property. It includes credit card debt, medical bills, payday loans, utility bills and signature loans. Real property must be liquidated, though you are allowed in most states to keep a percentage of the proceeds in order to get a new start. Chapter 7 bankruptcy has a lasting impact on your credit rating, but your credit might be seriously damaged already if you’re considering bankruptcy. It might be best to file for chapter 7, get your debts cleared and then get a fresh start on your financial future.

Is Chapter 13 or Chapter 7 Bankruptcy Right for You?

Talk with an experienced bankruptcy attorney who can give you legal advice based on your assets, debts and income. If you don’t have the means to pay for a bankruptcy attorney but need to file in order to have the opportunity for a fresh start, you may find some bankruptcy lawyers that will work for lower fees or pro-bono in order to be of help to you.