With two options to consider when it comes to bankruptcy here is what one qualified Phoenix bankruptcy lawyer said about the difference between a Chapter 13 and a Chapter 7 bankruptcy and what the advantages and disadvantages of each are.

This is actually a question that comes up all the time.

A favorite among lawyers is Chapter 7 bankruptcy and the reason being is that everyone truly gets a fresh start. Now you can get a Chapter 7 bankruptcy and the fresh if you make a certain income and that income enables you to pay off your monthly expenses, but there's nothing additional left.

Most people feel as if they're paying just the minimum on all of their bills and there are no moneys left to pay those additional bills that are creeping up on them.

So Arizona has set up some amounts that you can make and you can't make over them in order to file for Chapter 7.

The difference between a Chapter 7 and 13 is there is an income limit on a Chapter 7. Now on a Chapter 13, there is no income limit. However, what can be difficult in the Chapter 13 is you have to repay back a portion of your debt.

Chapter 13 is really a good idea for individuals who are high income earners and they have a stable income. They're not facing unemployment or layoff. And they want to save their home because they're behind on their payments and maybe they're also behind on their car.

What's typical is that once all of their bills are paid for reasonable, ordinary expenses like utilities, child care, mortgage payments, in their Chapter 13 bankruptcy they will pay a small portion back of the averages, the amounts that they're behind on their house, the amount that they're behind on their car, every month back to the court. And they' will disperse those funds back to their creditors.

If they have a substantial amount of credit card debt or other unsecured debts, personal loans, maybe some repossessions and they're behind on their house, a Chapter 13 will allow them to pay back that balance that's owed on the house along with the mortgage. And if there isn't any other income left, they probably won't be paying back any other debt.

Each case is unique. It's, of course, case by case and income by income based on what kind of debt people have. Your Phoenix bankruptcy lawyer will give you the best options when they have all the information.

But that's the biggest difference between Chapter 7 and Chapter 13. Namely, it's driven by income.

When you sit down with your Phoenix bankruptcy lawyer you would go over your paychecks and see where you fall and what you qualify for.

That also speaks to the advantages and disadvantages. But, Chapter 7 is a favorite for bankruptcy lawyers. It allows people to get a complete fresh start and not have to pay back their debt; this is a really big advantage in a Chapter 7.

But, for clients who want to hold onto their houses and they want to repay, Chapter 13 is perfect for them. It gives them an opportunity to stop foreclosure, to stop repossession of vehicles, and continue on.

Now both, of course, affect your credit and that's always a disadvantage in bankruptcy and we will talk about that in another article, what you can do to improve your credit after bankruptcy.

This gives you an idea of what you can expect with Chapter 7 and Chapter 13, the differences and the advantages for them. Remember, consult with your Phoenix bankruptcy lawyer before making any final decisions.