What is the difference between Chapter 7 and 13 Bankruptcy?

The difference between Chapter 7 and 13 Bankruptcy is the way they both handle the repayment of debts. Chapter 7 Bankruptcy is more of a liquidation process. In Chapter 7 Bankruptcy, you can discharge debts, meaning you don’t have to repay them. This includes unsecured debts such as credit cards, medical bills, and personal loans. To do this, you must qualify under specific requirements, like the means test. Chapter 13 Bankruptcy is different because it does not discharge the debt. Instead, it sets up a payment plan for a certain period of time. This payment plan is often based on the amount of disposable income you have and the amount of debt you owe. During this time, you have to make regular payments to the court-appointed trustee. Once all the payments have been made, the debt is then considered paid in full. In California, it is important to note that both Chapter 7 and Chapter 13 Bankruptcy can have varying requirements depending on the type of debt and the jurisdiction. It is also important to understand which type of bankruptcy best suits your situation and to be aware of the consequences of filing for either chapter. Therefore, it is always best to consult a legal professional before filing for either type of bankruptcy in California.

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What is the difference between Chapter 7 and 13 Bankruptcy?

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