HOW DO YOU DETERMINE WHICH CHAPTER TO FILE, 7 OR 13?

There are numerous factors that determine whether chapter 7 or chapter 13 is better. Here are some:
A. Disposable Income
The “means test” is a mathematical test for determining disposable income. The means test calculation is made based upon a debtor’s average monthly income less allowable expenses under IRS standards. Disposable income may also be determined by estimating income for the foreseeable future.
If there is significant disposable income, chapter 13 for a 5-year plan will be required.
If there is no disposable income, either chapter 7 or chapter 13 is available.
B. Prior Bankruptcy Filings
There are restrictions as to how often an individual may file a bankruptcy. If a chapter 7 bankruptcy discharge has been granted, a chapter 7 bankruptcy may not be filed for 8 years and a chapter 13 bankruptcy may not be filed for 4 years. If a chapter 13 bankruptcy discharged has been granted, a chapter 13 bankruptcy may not be filed for 2 years and a chapter 7 bankruptcy may not be filed for 6 years.
C. Protection of Assets
Most assets a debtor has are protected by the exemption laws of the state and will not be lost in a bankruptcy. Assets unprotected, i.e. non-exempt, will be turned over to the trustee and sold, in a chapter 7 bankruptcy. Assets that would be turned over to the trustee in a chapter 7 case may be kept in a Chapter 13, but the non-exempt value of those assets will be to the trustee as part of plan payments, over 3 to 5 years . Again, a review needs to be made for each case.
D. Saving a home from foreclosure
In chapter 13, unpaid amounts owed to the mortgage company may be paid over 3 to 5 years, as part of plan payments. The case must be filed before the foreclosure sale (Colorado law), plan payments will include an amount to cure the default, and regular mortgage payments must be paid beginning in the first month after filing the bankruptcy case.
E. Discharge certain divorce obligations
Marital debts that are required to be paid by the divorce court are not dischargeable in a chapter 7 bankruptcy. Except for domestic support obligations, court order obligations to pay the other parties debts or to protect the other party from collection efforts of marital creditors may be discharged in a chapter 13.