Chapter 7 vs Chapter 13
Which Personal Bankruptcy is Best?
What is the difference between Chapter 7 bankruptcy and Chapter 13 bankruptcy? Well there are many differences and each has its benefits that the other can't offfer.
A Chapter 7 bankruptcy, the most common form of personal bankruptcy, allows you to have most of the debts you owe discharged by the bankruptcy court.
In a Chapter 7 bankruptcy, you will surrender all your non-exempt property to the bankruptcy trustee in exchange for this discharge.
There is a means test that is conducted to insure that you income to debt ratio is large enough to qualify for Chapter 7 bankruptcy. Look at our page on Chapter 7 bankruptcy for more details.
In a Chapter 13 bankruptcy, your unsecured debts will be restructured to allow you to repay them in a three to five year period. Many of your secured debts, such as a car loan or mortgage will continue under the current agreements as long as you continue to make the monthly payments.
The amount of your unsecured debt that will be included in the repayment plan you file in the Chapter 13 bankruptcy case will depend on how much money you owe, how much you earn and how much property you own.
In most cases, you will be able to keep all your property, including your home, car, retirement savings, and tools you use to do your job.
Consulting with a bankruptcy attorney will give you a better idea how a Chapter 13 repayment plan will help you.
Bankruptcy exemptions allow you to keep most of your property in a Chapter 7 bankruptcy case. Those exemptions also assist you in Chapter 13 cases, but it is best to discuss your individual case with an attorney that understands the bankruptcy laws in your state.
Bankruptcy laws differ from state to state, so what is included in bankruptcy exemptions for one state may not be in another. It is important that you have a complete inventory of your property and all your debts when you discuss your case with a bankruptcy attorney.
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