What is the difference between Chapter 7 and 13 Bankruptcy?

Chapter 7 and 13 Bankruptcy are two types of bankruptcy protection available to individuals in Texas. Chapter 7 bankruptcy is the most commonly filed bankruptcy and is also known as liquidation bankruptcy because it eliminates most debts and liquidates any assets of value to satisfy creditors. This type of bankruptcy requires that the debtor pass a means test and be able to prove they are unable to pay their debts to creditors. Chapter 13 bankruptcy is a type of reorganization bankruptcy that allows debtors to keep their assets and enter into a repayment plan to satisfy their debts. The repayment plan is a court-ordered agreement between a debtor and their creditors, allowing the debtor to pay back their debt over time instead of wiping it out altogether. Creditors are generally required to agree to the repayment plan before the court will approve it. In summary, the main difference between Chapter 7 and 13 Bankruptcy is that Chapter 7 bankruptcy eliminates most debts, while Chapter 13 bankruptcy allows a debtor to keep their assets and enter into a repayment plan to repay their debts over time. Both types of bankruptcy require the individuals to pass a means test and prove their inability to pay their debts.

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What is the difference between Chapter 7 and 13 Bankruptcy?

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