What are the differences between Chapter 13 Bankruptcy and Chapter 7 Bankruptcy?

Chapter 13 bankruptcy and Chapter 7 bankruptcy are two distinct types of bankruptcies under the United States Bankruptcy Code. Both Chapters provide debtors with ways to eliminate their debts, but the primary difference between the two is the repayment plan. With Chapter 13, debtors enter into a repayment plan. This plan, if the court approves it, is paid out for 3 to 5 years, during which time the debtor makes regular payments to creditors. During this time, creditors are not able to take legal action to collect on the debts. With Chapter 7, debtors liquidate assets in order to pay creditors. Creditors will receive a portion of the repayment, but the remaining debt will be discharged. This means that the debtor won’t have to make any payments and creditors won’t be able to take any legal action to collect the remaining debt. Another difference between the two Chapters is their eligibility requirements. To qualify for Chapter 13, debtors must have a steady income and their total unsecured and secured debts must not exceed certain limits; on the other hand, Chapter 7 requires no income verification and there is no debt limit. To make a decision between Chapter 7 and Chapter 13, debtors should consult a bankruptcy attorney who can provide information on the qualification criteria and repayment plan that best suits their individual needs.

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What are the differences between Chapter 13 Bankruptcy and Chapter 7 Bankruptcy?

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