Filing for bankruptcy is a difficult decision to make. It’s a choice that will affect your financial future as well as your reputation. However, when you are swimming in debt with no one to throw you a lifeline, it is often your best option.

Not sure how to get started? One of your filing options is Chapter 13 bankruptcy. Here are three ways to decide whether it’s the right choice for you:

You Want to Keep Your Property

As an individual debtor, you have a few options when thinking about bankruptcy. The first that people usually turn to is Chapter 7 bankruptcy. This type of bankruptcy is commonly referred to as a liquidation bankruptcy because those who choose it will have to liquidate their nonexempt assets in order to pay off their debts.

Unlike Chapter 7 bankruptcy, Chapter 13 bankruptcy allows you to keep your property. While Chapter 7 uses your property to pay off debts, Chapter 13 uses a customized repayment plan. In fact, filing for Chapter 13 can even help prevent your home from going into foreclosure.

You Don’t Qualify for Chapter 7 Bankruptcy

Even if losing property is not an issue for you, you might not qualify for Chapter 7 bankruptcy. Debtors who decide to file for Chapter 7 bankruptcy must first pass what is called  a “means test.” The test is simple: if your income is greater than the median income in your state and you have disposable income that could be used to pay off some of your debt in a Chapter 13 bankruptcy repayment plan, then you don’t qualify for Chapter 7.

You Want a Repayment Plan Based on Your Income

Chapter 13 bankruptcy allows you to create a repayment plan based on the amount that you owe. Essentially, if your average monthly income for the six months that preceded your filing exceeds the median income for your state, you will have to propose a 5-year repayment plan. On the other hand, if your average income for those six months is less than the median state income, you will qualify for a 3-year repayment plan. After the time of your repayment plan lapses, individual creditors cannot force you to pay them in full.

Bankruptcy is a complicated subject. If you are not sure whether you should file, or if you’re not sure which type of bankruptcy is your best option, contact the bankruptcy experts at AM Law. We will help you find the best solution to your financial problems so that you can get on with your life. Call us today.