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

Chapter 7 and Chapter 13 bankruptcy are two different types of bankruptcy available to consumers in Virginia. Chapter 7 bankruptcy is the most common type of bankruptcy and the fastest way to get rid of debt. It is known as a “liquidation bankruptcy” because you must surrender any non-exempt assets in exchange for getting your unsecured debt discharged. Any remaining debt is then wiped away and you are no longer obligated to pay it. Chapter 13 bankruptcy is sometimes referred to as a “wage earner’s plan”. It allows individuals to come up with a repayment plan to pay back some of their debts over 3-5 years. Unlike Chapter 7, you don’t have to liquidate any assets in order to pay back your creditors. In most cases, you are only required to pay a portion of what you owe. After you have fulfilled the repayment plan prescribed in your Chapter 13 bankruptcy, the remainder of your debt will be wiped away. The main difference between Chapter 7 and Chapter 13 bankruptcy is that Chapter 7 allows you to get a fresh start and eliminate all of your debts, while Chapter 13 requires you to repay some of your debts but offers more flexibility when it comes to paying them off. Additionally, some types of debt, such as student loans, are not dischargeable in Chapter 7, but can be discharged in Chapter 13. So choosing between the two will depend on your individual financial situation.

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

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