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

Chapter 7 bankruptcy is the process of liquidating debt while Chapter 13 bankruptcy is the process of consolidating debt. Chapter 7 bankruptcy, which is typically the most common type of bankruptcy filing, involves liquidating non-essential assets to pay back creditors. The process of filing for Chapter 7 bankruptcy begins with the debtor filing a petition with the bankruptcy court. After that, the bankruptcy court appoints a bankruptcy trustee to take control of any non-exempt property (assets that are subject to liquidation). These items are sold to pay back creditors, with priority given to secured creditors. The remainder of the debt is discharged after the sales are complete. Chapter 13 bankruptcy, on the other hand, is a debt consolidation option. This process involves creating a repayment plan that is usually for a 3-5 year period, depending on how much debt the debtor has. During this time, the debtor is allowed to keep all of their property while making payments to creditors. Once the plan is complete, the remaining debt is discharged and the debtor has fulfilled their obligations. The primary difference between Chapter 7 and Chapter 13 bankruptcy is that Chapter 7 is a liquidation process while Chapter 13 is a debt consolidation process. Both methods have their pros and cons and depending on the individual’s financial situation, one might be a better option than the other. It is important to consult with a qualified bankruptcy attorney in order to make sure that the right decision is made.

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

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