What is the difference between Chapter 7 and Chapter 13 when filing for bankruptcy?
— Ruth A. Chapter 7 bankruptcy is usually referred to as a “liquidation” bankruptcy. Generally, a Chapter 7 bankruptcy wipes out unsecured debt such as credit cards, medical bills, and unsecured personal loans. If you are current on your secured debts (ex: house, car, furniture, appliances) you can generally keep those items in a Chapter 7 bankruptcy as long as you stay current on the payments. Chapter 13 bankruptcy is a repayment plan with the Court. A Chapter 13 bankruptcy usually lasts three to five years and you make a payment each month to the bankruptcy court that includes a portion of your debts. There are usually two reasons a person files Chapter 13 bankruptcy: 1) they are behind on their house and/or car payment(s) and want to keep their house and/or car; or 2) they make too much money and the Court will not allow them to file Chapter 7 bankruptcy and just wipe out their unsecured debts. For more specific information on which type of bankruptcy will be best for you, contact
Related Questions
- I received a discharge in a Chapter 7 Bankruptcy, but some debts that could not be discharged remain. Can filing a Chapter 13 help me with these debts?
- What is the basic difference between Chapter 7 bankruptcy and Chapter 13 bankruptcy?
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