What is the difference between Chapter 7 and Chapter 13 Bankruptcy?

In South Carolina, Chapter 7 and Chapter 13 bankruptcy are two different types of bankruptcy proceedings that are used to help individuals and businesses repay their debt. Chapter 7 is a liquidation bankruptcy in which a court-appointed trustee liquidates (sells) all of the debtor’s assets and uses the proceeds to pay the creditors. Once the assets are liquidated and the creditors are paid, the remaining debt is discharged, meaning that the debtor does not have to pay it back. Chapter 13 is a reorganization bankruptcy in which a court-appointed trustee creates an individualized payment plan for the debtor. This payment plan can last anywhere from three to five years and requires the debtor to pay back some, or all, of the debt. At the end of the payment plan, any remaining debts are discharged. The main difference between Chapter 7 and Chapter 13 is that in Chapter 7 all of the debtor’s assets are liquidated in order to pay the creditors, while in Chapter 13 only a portion of the debt is paid according to a payment plan. Chapter 7 is usually preferred when the debtor does not have enough income to pay back the debt, while Chapter 13 is usually preferred when the debtor can make payments but cannot pay off all the debt.

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What is the difference between Chapter 7 and Chapter 13 Bankruptcy?

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