What are the differences between filing for Chapter 7 and Chapter 13 bankruptcy?

Chapter 7 and Chapter 13 bankruptcy are two different types of bankruptcy available to people living in Delaware. Chapter 7, also known as liquidation bankruptcy, is the simplest and fastest way of eliminating most unsecured debts. In order to qualify for Chapter 7 bankruptcy, you must pass a “means test” which compares a person’s income to the state median income. If the person’s income is above the median, they are not eligible for Chapter 7. Those that do qualify must give up any exempt assets, and the court will use the proceeds to pay their creditors. After the liquidation process is complete, the court will discharge most types of debt. Chapter 13 bankruptcy, also known as reorganization bankruptcy, is typically used by people who make too much money to qualify for Chapter 7. With Chapter 13, individuals are allowed to keep their property while they make payments to their creditors. The court will issue a payment plan that lasts three to five years, and if the debtor adheres to the plan, their remaining debt will be eliminated. In summary, the main difference between Chapter 7 and Chapter 13 bankruptcy is that Chapter 7 requires the liquidation of assets to satisfy debts while Chapter 13 does not. Chapter 7 is for those who can’t afford to pay back their creditors, while Chapter 13 is for those who can. Both can provide debt relief and a fresh financial start for Delaware residents.

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What are the differences between filing for Chapter 7 and Chapter 13 bankruptcy?

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