Chapter 7 Bankruptcy vs. Chapter 13 Bankruptcy: What's the Difference?
CHAPTER 7 (Liquidation) |
CHAPTER 13 (Adjustment of debts for an individual with regular income) |
|---|---|
| You may want to consider Chapter 7 if : | You may want to consider Chapter 13 if : |
| Do not have a lot of other property besides basic necessities i.e., furniture and clothing | You own a home or other property that you have a significant amount of equity in, and you want to keep it |
| After paying your basic monthly expenses, you have little or no money left over, or if you are not able to meet your basic expenses each month | You are able to stay current on your living expenses and have a regular income, but are unable to keep up on your scheduled debt repayments. |
| Advantages of Chapter 7 : | Advantages of Chapter 13 : |
| Most or all of your unsecured debts can be eliminated (discharged) | An affordable repayment plan for your past due accounts, while being able to keep most of your property. |
| It's quick - it might only be a few months before you receive your discharge. | According to the repayment schedule you and your trustee agree on, you will have 3-5 years to catch up on your delinquencies. |
| You will no longer have to deal with creditors over the phone, or by mail. Once the automatic stay is in effect, or the debts are discharged, creditors are not allowed to contact you. | You will no longer have to deal with your creditors - you will make one monthly payment to your bankruptcy trustee, who will then distribute the money among your creditors. You are given a 3-5 year protection period in which creditors are not allowed to contact you. |
| Anyone who co-signed on a loan with you may be protected - their credit may not be affected. | |
| Who can file under Chapter 7 ? | Who can file under Chapter 13 ? |
| If you have taken the "means test" and qualify, and have completed a pre-filing credit counseling session with an approved credit counselor, you may file for Chapter 7 bankruptcy protection. |
If your unsecured debts are below $307,675 and your secured debts are less than $922,975, you may file for Chapter 13 bankruptcy protection. |
| More Information about Chapter 7 | More Information about Chapter 13 |
Do You Need Help Deciding Whether Chapter 7 or Chapter 13 Bankruptcy is Right For You?
Most likely, you do need help understanding which makes the most sense for your situation; 1-800-Bankruptcy can help. We will connect you with a local bankruptcy attorney who can assess your financial situation and help you decide whether filing for Chapter 7 or Chapter 13 bankruptcy protection is right for you.
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