If you are considering bankruptcy in Pomona CA, one of the first and most important decisions you will face is which chapter to file under. Chapter 7 and Chapter 13 are the two most common options for individuals, but they work very differently and serve different financial situations. Understanding the key distinctions can help you make a more informed choice. Law Offices of Terrence Fantauzzi works with clients throughout the Pomona area to find the path that fits their circumstances.
How Chapter 7 Works
Chapter 7 is often called liquidation bankruptcy. It is designed for people who have limited income and need fast, significant relief from debt. Once your case is filed, most unsecured debts — such as credit card balances, medical bills, and personal loans — can be discharged within three to four months. The process is relatively quick compared to other forms of bankruptcy.
The trade-off is that a court-appointed trustee may liquidate certain non-exempt assets to pay creditors. In practice, many Chapter 7 filers have few or no non-exempt assets, meaning they go through the process without losing property. California’s exemption laws can protect a meaningful amount, including equity in a vehicle and certain personal property.
To qualify for Chapter 7, you must pass the means test, which compares your income to the California median. If your income is too high, you may not be eligible and will need to consider Chapter 13 instead.
How Chapter 13 Works
Chapter 13 is a reorganization bankruptcy. Rather than discharging debts immediately, it allows you to restructure what you owe into a manageable repayment plan that lasts three to five years. At the end of the plan, most remaining eligible debts are discharged.
Chapter 13 is a strong option for people who have regular income but are struggling to keep up with payments. It is particularly useful if you are behind on mortgage payments and want to save your home from foreclosure, since the repayment plan can allow you to catch up on arrears over time. It can also help with car loans, back taxes, and other priority debts that cannot be discharged under Chapter 7.
Because Chapter 13 involves a longer process and requires consistent monthly payments, it demands a stable income. Your attorney will help you build a repayment plan that is realistic and meets the court’s requirements.
Key Factors to Consider
Several factors will shape which chapter makes the most sense for your situation. Your income level will determine whether you qualify for Chapter 7 at all. The types of debt you are carrying matter as well — if most of your debt is secured, such as a mortgage or car loan you want to keep, Chapter 13 may offer more useful tools. The assets you own and whether you could lose them in a Chapter 7 liquidation is another consideration. Finally, your timeline matters: if you need relief quickly and have mostly unsecured debt, Chapter 7 may be the faster route.
There is no single right answer. The best choice depends on a careful look at your complete financial picture, and that is exactly what an experienced bankruptcy attorney can help you do.
Talk to a Bankruptcy Attorney in Pomona CA
Making the wrong choice between Chapter 7 and Chapter 13 can have real consequences for your finances and your future. Law Offices of Terrence Fantauzzi is here to help Pomona CA residents evaluate their options with confidence. Call (909) 552-1238 today to schedule a consultation and get the guidance you need.
