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

When filing for bankruptcy in North Carolina, individuals have the option to file under either Chapter 7 or Chapter 13. Each of these bankruptcy chapters provides different benefits and has its own requirements. Chapter 7 bankruptcy is the type of bankruptcy most commonly filed in North Carolina. It is used to discharge unsecured debts, such as credit card debt and medical bills, and is usually completed within a few months. In order to qualify for a Chapter 7 bankruptcy, individuals must pass a means test, which measures their income and assets. Chapter 13 bankruptcy is a little more complex and is used to create a payment plan for people who are unable to pay their bills. This type of bankruptcy can take longer, as it requires individuals to make a 3-5 year repayment plan. Individuals must also have a consistent source of income, such as a job, which must be documented. Chapter 13 bankruptcy also requires that individuals pay any back taxes and any domestic support payments, such as child support or alimony. In both types of bankruptcy, individuals’ assets may be taken to pay off creditors. Chapter 7 bankruptcy takes any non-exempt property and liquidates it, while Chapter 13 bankruptcy allows individuals to set up a payment plan to pay off their creditors over a longer period of time, usually 3-5 years. Ultimately, individuals must decide which type of bankruptcy is best for their situation. Chapter 7 is often the preferred option due to the quicker process, but Chapter 13 can provide a more manageable solution for those unable to pay off their debts immediately.

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

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