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

When someone in Texas decides to file for bankruptcy, they can choose to file under either Chapter 7 or Chapter 13 of the United States Bankruptcy Code. Each type of bankruptcy has different rules and affects debtors in different ways. Chapter 7 is a liquidation bankruptcy that involves selling off some of a debtor’s assets to pay off their debts. A debtor’s nonexempt assets are usually sold and the proceeds are divided among their creditors. In Chapter 7, most unsecured debt, such as credit-card debt and medical bills, can be eliminated. Chapter 13 is a reorganization bankruptcy that involves a payment plan. This type of bankruptcy allows a debtor to keep all of their assets in exchange for a court-approved plan to pay back all or part of their debts according to their ability to pay. In Chapter 13, debtors typically pay back a portion of their debt over a three- to five-year period. In summary, the differences between filing for Chapter 7 and Chapter 13 bankruptcy in Texas are that Chapter 7 is a liquidation bankruptcy, while Chapter 13 is a reorganization bankruptcy. In Chapter 7, a debtor’s nonexempt assets are typically sold off to pay creditors, while in Chapter 13 debtors can keep their assets and they are required to make payments on the remaining debt according to a court-approved plan.

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

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