Q: what is the difference between chapter 7 and chapter 13 Bankruptcy?
A: The main difference is that in a chapter 13 you must come up with a plan of paying a percentage of what is owed over the course of 3 years, extended to 5 with court approval. In a chapter 7, all of the debt gets discharged. Go see a local bankruptcy attorney about this, there is much more to it.
A:
In addition to Chapter 7 being a means of discharging debt and Chapter 13 being a means of restructuring debt to pay back over time, Chapter 7 is generally most useful for people who have a lot of unsecured debt. Some common examples of unsecured debt include credit card bills, medical bills, old utility bills and unsecured loans.
Chapter 13 is often the best option for a person who has secured debt and wants to keep the property, or has non-exempt assets that he wants to keep. For example, if a debtor has significant equity in his home above and beyond what can be exempted, Chapter 13 may provide a means of managing debt without losing the house.
Chapter 13 is also an option for many debtors who don't qualify for Chapter 7 bankruptcy because their income is too high relative to the amount of outstanding debt.
A local bankruptcy attorney can help you assess whether you qualify for Chapter 7 bankruptcy and which option would be best given your specific circumstances.
*Kevin Chern is Managing Partner of UpRight Law, a national law firm with licensed attorneys providing bankruptcy and consumer legal services in all 50 states. He is an Illinois licensed attorney with 21 years of federal consumer bankruptcy and consumer protection law experience. This response is for informational purposes only and is not intended to be legal advice. For legal advice, consult an attorney licensed in your state with the appropriate expertise.
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