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

The main difference between Chapter 7 bankruptcy and Chapter 13 bankruptcy is how they are structured and how they work. Chapter 7 bankruptcy is known as a liquidation bankruptcy and is the most common type of bankruptcy filing in Mississippi. It allows individuals to discharge most of their debts and have them wiped away. This is usually done by selling or liquidating some of the individual’s assets in order to pay off their debts. Chapter 13 bankruptcy is known as a repayment bankruptcy and is designed to allow individuals to restructure their debt and pay it back over a certain period of time. In order to file for Chapter 13, the individual must have a reliable income, and must create a plan to pay back their debt over a 3 to 5 year period of time. Chapter 13 is also known as a reorganization bankruptcy, since it allows the individual to restructure their debt so that it’s not so overwhelming. In order to qualify for either type of bankruptcy, an individual needs to pass a means test to prove they meet the requirements for filing for bankruptcy. Additionally, the individual must attend credit counseling and a debtor education course before they are approved for bankruptcy. Both Chapter 7 and Chapter 13 bankruptcies remain on an individual’s credit report for 10 years, and can have a major impact on credit scores.

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

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