What is the basic difference between Chapter 7 bankruptcy and Chapter 13 bankruptcy?
Chapter 7 bankruptcy is for a person who needs all of his income to pay his costs of living. A Chapter 7 bankruptcy frees the person from debts without having to set up a payment plan through the court. The case is typically over in about three months from the day of filing. There is a possibility of losing property not covered by liens and exemptions. Chapter 13 bankruptcy is for a person who has more income than his monthly expenses but still needs protection from creditors. A Chapter 13 bankruptcy protects the person from his creditors from the day of filing and at the end of the three to five year payment plan through the court frees the person from any unpaid balances on the debts owed on the day of filing. Unsecured debt is frozen as of the day of filing, the creditors cannot try to collect the debt, and no interest can be added. Further, in many 13 cases, the payments to the court are less than the total owed. If you file Chapter 13, obtain the court’s approval of your plan, and
