When approaching the possibility of filing for bankruptcy, it is important to distinguish between the different Chapters. This is because the different types of bankruptcy vary widely, and they involve different sacrifices and time frames.

Chapter 7 bankruptcy is one of the most popular bankruptcy options for individual debtors. This is because it offers many advantages, and gives debtors the option of clearing their debts completely in a relatively short time frame. The following are three key reasons why Chapter 7 bankruptcies are so popular.

Chapter 7 bankruptcy is available to those with a low income

In other bankruptcy filings, debtors must create budgeting plans based on their income and fixed expenses. In the case of Chapter 13 bankruptcy, debtors are required to dedicate their income to debt repayment for three to five years. Chapter 7 bankruptcy, in contrast, liquidates existing assets to generate funds to pay off debts. While this means that you may lose your home and other assets, you can go through the process when you have a low income.

Chapter 7 bankruptcies are completed quickly

The process of asset liquidation can be completed in several months. Due to the selling of assets, it’s possible to generate a large number of funds in a short period of time. Therefore, you can save a great deal of time by going through Chapter 7 bankruptcy.

Chapter 7 bankruptcy usually results in a debt discharge

If the sum of your liquidated assets is not enough to pay off all of your debts, you will likely qualify for a debt discharge. This means that the bankruptcy courts will wipe off all the other debts that you are facing. This gives you a great opportunity to gain a fresh start from your debts and to start living life without financial worries.

Chapter 7 bankruptcy is clearly a great option for many debtors, but it is only available to some people. In order to be eligible, you must pass a means test that shows that you do not have the financial means to go through a Chapter 13 bankruptcy.

You should gain a good overview of all bankruptcy options available to you before you commit to one Chapter.