Chapter 13 or Chapter 7

Chapter 13 Vs Chapter 7 Bankruptcy

You may wonder how to compare Chapter 7 vs. Chapter 13 Bankruptcy and what bankruptcy is right for you. The difference between Chapter 7 and Chapter 13 is simple: Chapter 7 allows you to immediately discharge your debts while Chapter 13 requires you to repay your debts over a 3 or 5 year period through a debt repayment plan.

What bankruptcy is better for you and the differences of bankruptcy is a question to ask your bankruptcy lawyer, but generally, whether you can file Chapter 7 will depend on your median income and if it is higher or lower than the median income for your state. Debtors with assets they would like to keep should consider filing Chapter 13, and if your median income is too high, assuming you decide to file bankruptcy, you will have no choice but to file Chapter 13 and restructure your debt payments and repay them over the life of your bankruptcy plan.

Comparing bankruptcy options takes a bit of research. Talk to a bankruptcy lawyer and find out the differences of the two and whether bankruptcy will solve your financial difficulties. Bankruptcy is a serious financial decision and will not be right for everyone.


Similarities of Chapter 7 and Chapter 13 Bankruptcy

  • Filing either Chapter 7 or Chapter 13 can possibly stop your home from being foreclosed on.
  • You can possibly keep keep your car if you file Chapter 13 or Chapter 7 bankruptcy.
  • Filing bankruptcy does not discharge ALL debts.
  • Can I avoid going to bankruptcy court?  No, you must attend court for both chapter 13 and chapter 7.
  • Chapter 7 and Chapter 13 stops bill collectors from harassing you.
  • Wage garnishments will stop if you file either bankruptcy.
  • You can still get credit after filing, whether it was Chapter 13 or Chapter 7 bankruptcy that you declared.
  • You must take and finish and a financial management course for either bankruptcy chapter.
  • It is reflected on your credit report, up to 10 years, when filing either Chapter 7 or Chapter 13.
  • There is a 341 meeting of creditors involved in both bankruptcies.

Differences between Chapter 7 and Chapter 13 Bankruptcy

  • To file Chapter 13 bankruptcy you must have an income, because you will be paying back the debt over time.  In a Chapter 7 bankruptcy, income is not required as you are basically asking that your unsecured liabilities be discharged by the court.
  • Chapter 7 immediately discharges credit card debts and personal unsecured loans, chapter 13 does not.
  • Chapter 13 bankruptcy allows you to pay back your debts over a 3 to 5 year time frame, Chapter 7 does not as it is a liquidation bankruptcy.
  • You can keep your asssets when filing Chapter 13 because you are making a new agreement to pay the debt back.