Should You Always Go for Chapter 7 over Other Bankruptcies?

Generally, chapter 7 bankruptcy is going to be preferable for most people in financial distress. Chapter 7 is faster, cheaper and less complicated than chapter 13 or other types of bankruptcy. It also doesn't require any repayment of your debts, like a chapter 13 or chapter 11 business bankruptcy.

However, not everyone can qualify for a "straight" chapter 7 bankruptcy. There also may be times when your property could be at risk in a chapter 7, meaning a chapter 13 would be preferable, but this is not usually the case if you've become insolvent.

File Bankruptcy. Lose All Your Stuff.

If you file for bankruptcy you will lose all of your things.

Wrong.

This common misconception has been beaten into the minds of many people who have considered bankruptcy as an option. Bankruptcy is not meant to deprive you of your things, or punish you in any way for becoming overburdened with debt. Quite the contrary. Bankruptcy is meant to help honest debtors get rid of their debt so they can get back on their feet and move on with their life.

It's All About the Equity

So you're considering bankruptcy, and doing your research online. You realize that in a chapter 7 bankruptcy some of your property could be subject to liquidation. You also learn that there are certain exemptions that allow some of your property to be protected from liquidation.

Common Belief About Bankruptcy Exemptions
Most people in their research come to the conclusion that a bankruptcy exemption must cover the entire value of their property to protect it. This is inaccurate.