Many people who are in serious financial trouble seek relief through bankruptcy. Traditionally, bankruptcy has been thought of as a process in which a debtor's non-exempt assets are sold off, the money from the sale is used to pay creditors, and then any remaining debts are "discharged," meaning they will never have to be paid. This is a basic description of what is known as Chapter 7 bankruptcy.

Some debtors do not qualify for relief under Chapter 7 because their income is too high. In this case, there is another option for relief called Chapter 13 bankruptcy. Under Chapter 13, the debtor's assets are not sold, but the debtor makes a payment plan to pay down debts.

There are good reasons why a debtor who qualifies for either chapter might choose Chapter 13. Debtors with a steady income, and who own valuable non-exempt assets that they would lose under Chapter 7, might opt for Chapter 13, even though it does not offer the same discharge of debts available under Chapter 7.

What one can see from even a cursory examination of these two types of relief is that the reasons for choosing one or the other are complex, and having good advice about which type of relief to choose is important. Fort Lauderdale Chapter 7 bankruptcy attorneys always stress the importance of helping clients choose the form of bankruptcy that will put them in the best financial position possible.

Unfortunately, not everyone gets good advice. A recent study done in a major American city found that in African American communities, a disproportionate number of debtors were choosing to file under Chapter 13. That is, comparing white debtors and black debtors with the same income, black debtors were more likely to choose Chapter 13.

There are many reasons why debtors choose one type of relief over the other. The researchers could not say conclusively why there was a difference along racial lines. However, they did speculate that perhaps the debtors in predominantly black communities were not receiving the best advice about which chapter to file under.

Every debtor who seeks relief under the Bankruptcy Code deserves to get a fresh start. Having good advice and a strong understanding of the different types of relief available is essential to getting the best financial relief.

Source: Bankruptcy Beat "Studies Find Racial Discrepancy in Chapter 13 Filings" 5/12/2011