How does chapter 13 differ from ordinary bankruptcy?
The key difference between Chapter 13 bankruptcy and traditional (Chapter 7, straight, liquidation, etc.) bankruptcy is that in Chapter 13, the bankruptcy debtor has to create a plan to repay a portion of his/her debt over a period of three (3) or five (5) years. The benefits of Chapter 7 bankruptcy are attractive for the majority of people. These include not being required to pay anything to creditors (in most cases) after the bankruptcy is concluded, not being required to sell any property (in most cases), and a lower overall cost (in most cases).
The benefits of Chapter 13 are that the debtor may be able to retain property that he/she would not otherwise be able to retain under Chapter 7. For example, if the debtor is behind on his/her car or house payment, under a Chapter 13 plan the debtor can make up delinquencies over the course of that plan. Also, the debtor can potentially reduce the overall amounts owed on such secured loans. Lastly, a debtor make end up spending less initially on a Chapter 13 plan. In many instances, a bankruptcy attorney will charge less up front on a Chapter 13 case because the balance of the fees are paid through the Chapter 13 plan.
Contact the Henshaw Law Office for further questions on either Chapter 7 or Chapter 13 bankruptcy matters.
The most striking difference is that a Chapter 7 lasts about 3 1/2 months, during which time you make no payments to the Court (and to qualify for Chapter 7 you must show that you have no money left over each month to make payments), whereas a Chapter 13 lasts from 3 to 5 years, and during that time you make monthly payments to the Court (because you have more income than expenses).
Source: http://wiki.answers.com/Q/What_is_the_difference_between_Chapter_13_and_Chapter_7_bankruptcy
Chapter 13 is also called a wage earner’s plan. This means a debtor with a regular income can draw up a debt payment plan. Actually, there are lots of pitfalls which you have to pay attention to. The duration of this plan, the scale of payment, conditions. In order not to get confused with this all it’s better to ask specialists for help. For instance, Voted Best bankruptcy attorney in san diego is a decent firm which can deal with such cases. After all, all legal issues are better to solve with solicitors.
In a straight (or ordinary) bankruptcy, the debtor does not pay off his/her debts. Instead, he/she must turn all over all of his/her non-exempt property to the Chapter 7 Trustee. The Trustee will sell all non-exempt assets. Creditors are paid from the proceeds of this sale. In a Chapter 13, you are not declared “bankrupt” and you may keep all of your property. Additionally, creditor’s claims may be completely satisfied. The fundamental difference between a 7 and a 13 is that a 7 discharges debts. In a 13, you have the opportunity to 1) pay what you owe or, 2) pay debts that are not discharged in a Chapter 7.
