Differences Between Chapter 7 and Chapter 13 Bankruptcy

Chapter 7 Bankruptcy

Chapter 7 is a liquidation bankruptcy designed to wipe out your general unsecured debts such as credit cards and medical bills. To qualify for Chapter 7 bankruptcy, you must have little or no disposable income. If you make too much money, you may be required to file a Chapter 13 bankruptcy.

Chapter 13 Bankruptcy

Chapter 13 is a reorganization bankruptcy designed for debtors with regular income who can pay back at least a portion of their debts through a repayment plan. If you make too much money to qualify for Chapter 7 bankruptcy, you may have no choice but to file a Chapter 13 case. However, many debtors choose to file for Chapter 13 bankruptcy because it offers many benefits that Chapter 7 bankruptcy does not (such as the ability to catch up on missed mortgage payments or strip wholly unsecured junior liens from your house).

In Chapter 13 bankruptcy, you get to keep all of your property (including nonexempt assets). In exchange, you pay back all or a portion of your debts through a repayment plan (the amount you must pay back depends on your income, expenses, and types of debt). For this reason, Chapter 13 is commonly referred to as a reorganization bankruptcy. Typically, Chapter 13 bankruptcy is for debtors who can afford to make monthly payments to get caught up on missed mortgage or car payments or pay off non dischargeable debts such as alimony or child support arrears.

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If you are considering filing for bankruptcy, or have questions regarding whether you should file, seek the qualified advice of Macfarlane Law who have seen the process in action.  Filing for bankruptcy will have lasting effects on an individual and a family, some positive and some negative, and the decision should be done under guidance.

  • Bankruptcy
  • Chapter 7
  • Adversary Proceedings
  • Credit Consequences
  • Exemptions
  • Stop Bill Collectors
  • Stop Foreclosures
  • Stop Garnishments
  • The Means Test
  • The Bankruptcy Process