What is a better option - Chapter 7 or Chapter 13? How to choose

Well, if you are not able to repay your debts, and can't afford even the settlement amount, then you should consider bankruptcy. Because this should be the last resort. However, it is a complicated solution. So, you should consult a bankruptcy attorney for the right remedy.

Though Chapter 13 bankruptcy is a better option since it stays on your credit report for 7 years, yet there are a few things you need to remember:

1. Chapter 13 bankruptcy helps you to pay off debts through a reorganized plan. You need to stick to that plan for 3-5 years.
2. You can't create an emergency fund during this 5 year period.
3. You have to allocate extra funds toward your monthly payments if there is a windfall.

The biggest benefit of Chapter 13 bankruptcy is that you won't lose your non-exempt asset.