What is the difference between Chapter 7 bankruptcy and Chapter 13 bankruptcy?

Chapter 7 bankruptcy and Chapter 13 bankruptcy are two different types of bankruptcy available to individuals in Delaware. Chapter 7 bankruptcy is a form of liquidation, which means that all of the filer’s non-exempt assets will be sold in order to pay back their creditors. After paying back the creditors, the remaining debts will be discharged. Chapter 13 bankruptcy is a form of reorganization, which means that the filer will propose a repayment plan to the court. This repayment plan usually involves payment of a portion of the debts in a three- to five-year period. The primary difference between Chapter 7 and Chapter 13 bankruptcy is how the debt is handled. With Chapter 7 bankruptcy, the filer’s assets will be sold in order to pay off their creditors. With Chapter 13 bankruptcy, the filer will be able to keep their property and will only owe a portion of their debt if the court accepts their repayment plan. Additionally, Chapter 13 bankruptcy can provide more protection to the filer, as it can stop foreclosure on their home or help them keep their vehicle. Another difference between Chapter 7 and Chapter 13 bankruptcy is the time it takes to receive a discharge. With Chapter 7 bankruptcy, the process is usually completed within three to four months, while with Chapter 13 bankruptcy, the process can take anywhere from three to five years. Finally, the most significant difference between Chapter 7 and Chapter 13 bankruptcy is the eligibility requirements. To be eligible for Chapter 7 bankruptcy, the filer must pass a means test to prove that they have a limited ability to repay their debt. However, Chapter 13 bankruptcy does not have any means test and so it is available to all individuals regardless of their financial situation.

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What is the difference between Chapter 7 bankruptcy and Chapter 13 bankruptcy?

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