Question

Question 1: A friend of yours, Vince, is having financial troubles. Vince is married with two children and had a high paying job as a professional athlete but is retired and has not found steady employment in his hometown of Columbus, Ohio. He owns a house worth $200,000.00, he has $100,000.00 in equity in the home and he has fallen behind $20,000.00 on his mortgage payments. He also owns a 2015 Toyota Highlander valued at $20,000.00 in which he has $10,000.00 in equity and is $2,500.00 behind in payments on the vehicle. Vince does not own any other property of value exceeding the bankruptcy exemptions in Ohio. Vince meets with an attorney who tells him that both Chapter 7 and Chapter 13 bankruptcy are options for him going forward. Vince tells you he is confused and asks you to explain his options in greater detail

Answer 1

Being a friend i would try my best to give an honest advice to my friend so that he might choose the best option incase he decides to file bankruptcy.
For that very reason i would explain to him the contents of both the options and then reflect infront of him the pros and cons of both cases so that he might in advance know about the consequences and outcome of both chapters so as to choose the better one.
As deciding whether to declare bankruptcy or not is a difficult decision to be made and thus needs to be taken into consideration.

Chapter 13:
If Vince chooses to file bankruptcy under chapter 13 then he has to take into consideration the following pros and cons :

Cons:
Under chapter 13 plan it will almost take five or more years for vince as per his prevailing conditions to pay back all of the debt which means he continuously for five years of his life has to work for repaying money back.

The payments set as an installment to be paid at specified times either monthly, quarterly or semestral is to be paid only from the disposable income earned by Vince, so the amount left after fulfilling basic needs such as food, medicines and shelter is to be paid back to bank.

It will not make him get rid of the student loan debt in case taken for himself or his children. That stills remains at place

The chapter 13 plan will affect his credibility and ruin his credit score affecting his future scope to borrow money for about ten years.

Vince will not be able to get any mortgage in future time.

His all credit cards will be seized for long period of time.

As Vince has two children but the plan will nit relieve him to full his obligations towards his children.

Chapter 13 bankruptcy will always remain on your records and thus hurt your creditworthiness as well as image for getting a reputed job.

Pros:

The payments specified to be paid under the plan might be more flexible than found under other plans.

Under this plan, vince will get more time to collect money for repaying the installments set. so chapter 13 might be suitable for Vince relieving him off this obligation but if only his income is stable.

If the income of Vince is unstable and not regular than this plan will prove better for him as it will help him reduce the payment amount every time.

Under chapter 13 once a repayment cycle is followed as per the prescribed time, and if you are regular then the creditor cannot force you to pay in full.

After almost two to three years of filing bankruptcy Vince will be able to regain his composure and get back to normalcy
He can obtain new lines of credit but relatively at higher interest rates

Chapter 7 option:
Pros:

Under this plan it will only take you to pay back the bank from three to six months so much in a much shorter time Vince can get rid of this bankruptcy obligations and responsibilities.

Unlike chapter 13 your earnings for the continuous five years will not have to be paid in the form of repayments, thus a new start can be immediately made.

The bar of not applying till six years fir another bankruptcy under chapter 7 dies not apply if 70-80 % of Vince's amount is settled with the time without any disruptions

It is not mandatory to repay the amount only from disposable income , all the other available sources can be used to repay back and hence get relieved easily

Cons
Chapter 7 might put in danger all the property of Vince , leaving nothing at all in his hands neither for his family.

Under this plan also the bankruptcy image will stay on your records almost up to 10 Long years

Vince if filed bankruptcy for a case under chapter 7 then he cannot file another case under section 7 almost for the next six to seven Years no matter what may has befallen him thus riskier than chapter 13.

Chapter 7 bankruptcy is allowed only after convincing the trustee or judge that Vince was not involved in any illegal practices and his property and belongings are not from black or illegal Money.

So as per my opinion it will be hard but better for Vince to choose chapter 7 and thus forfeiting his all property and other assets to get relieved from the debt as soon as possible. This will save Vince from Botheration of contuing tbis repayment orocess till long five years which can hamper the education and future of his family also, thus he shoukd better taje some help from rekatives to find a tempirary shelter and find a good job to bring back himsekf to his older peaceful self.

Hope i explained well

Sorry for mistakes due to fast typing.

Rate if satisfied :)

Good luck and God bless