Q: What is the difference between a personal bankruptcy, chapter 7 or chapter 13
A 13 is a reorganization type of Bky, and requires payments over a period of 3 or 5 years. This is usually done by people who want to save their home, or have bills that are not dischargable in a 7.
A 7 is liquidation and is usually completed within 6 months. To qualify for this type of case you must pass the Means Test. You should also evaluate if your property (real and personal) is exempt. Each of these issues have been addressed further by me in other questions.
A: Chapter 13 is better suited for people with higher incomes or a lot of assets, which they would not have to surrender in a Chapter 7. It is popular now for stripping off second mortgages and readjusting secured debt. Chapter 7 is best for people with fewer assets and lower incomes, and gets rid of credit card, medical and other unsecured debt fairly quickly and easily. Chapter 7 has to be carefully entered into, because unlike Chapter 13, it is difficult to dismiss once filed. Competent legal advice should be sought before getting into either, especially Chapter 7.
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