Differences in Chapter 7 & Chapter 13 Bankruptcy
Deciding to file for bankruptcy is a decision that shouldn’t be made lightly. After speaking with a lawyer that specializes in bankruptcy law, you have to determine what type of bankruptcy you are filing. Chapter 7 and Chapter 13 bankruptcy differences can often be confusing and make it difficult for people to decide which one is best for them. Below is an explanation of some of the significant differences between Chapter 7 and Chapter 13 bankruptcy.
Chapter 7 Bankruptcy
In Chapter 7 bankruptcy, individuals may discharge their unsecured debt. Unsecured debt includes things such as credit card bills, medical bills, and the remaining debt left after a foreclosure or repossession. These are the types of bills that have a tendency to build up quickly and can get overwhelming.
Chapter 7 bankruptcies are typically quick and efficient, lasting approximately 5 months. For those unable to make minimum payments, Chapter 7 can be the best way of getting rid of debt. A Chapter 7 bankruptcy does not involve any repayments as long as the individual does not own property with a high equity value. The individual also will not lose any property by filing bankruptcy. Instead, a Chapter 7 often involves just a straight cancellation of debt. Individuals must qualify for Chapter 7 bankruptcy through a means test, and Chapter 7 bankruptcy cannot discharge some types of debt, including most tax liability and student loans.
Chapter 13 Bankruptcy
In Chapter 13 bankruptcy, individuals set up a payment plan with their creditors allowing them to pay a portion of their debts over a period of time. The bankruptcy court will examine a debtor’s income and expenses and arrive at a plan that allows the individual to still afford their necessary expenses each month. After the repayment period is over, the remainder of the debt is canceled.
Chapter 13 bankruptcy is a great option for people who want to hold on to their homes, have unprotected equity from assets or do not qualify for Chapter 7 bankruptcy protection. Chapter 13 bankruptcy can help you get a manageable payment plan in place to get you back on your feet financially.
Bankruptcy Law at RGG Law
At RGG Law, our team has years of experience handling both Chapter 7 and Chapter 13 bankruptcy law. For help navigating the confusing realm of filing bankruptcy, schedule a consultation with one of our bankruptcy lawyers today. Your first consultation is free. Contact the RGG Law office today!