Chapter 7 vs. Chapter 13 Bankruptcy - Real estate, home loan and mortgages
  • March 01

Chapter 7 vs. Chapter 13 Bankruptcy

Bankruptcy Lawyer


If you are struggling with debt and cannot seem to make up the difference no matter how hard you work, it may be time to think about filing for bankruptcy. Bankruptcy isn’t the best debt management solution for every financial difficulty. However, there are good reasons why, each year, millions of Americans benefit from the opportunities that bankruptcy provides. As a result, filing for personal bankruptcy may be an option worthy of your consideration.

Why File For Bankruptcy?

There are a few primary reasons why Americans file for either of the two primary kinds of personal bankruptcy opportunities made available under the U.S. bankruptcy code. First, filing for bankruptcy initiates an “automatic stay” which keeps most creditors from filing new collection actions or pursuing existing collection actions such as wage garnishment. Second, while filing for bankruptcy does not lead to the discharge of all debts, it can lead to the elimination of significant debt burdens, which allows individuals to focus their remaining income on meeting their basic needs and paying down non-dischargeable debts.

While preparing to attend a risk-free consultation with an experienced bankruptcy lawyer, it can be helpful to familiarize yourself with the differences between Chapter 7 and Chapter 13 bankruptcy. Doing so will help to ensure that you ask any and all informed questions that you may have about filing for bankruptcy protection.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy is not available to all Americans. This form of bankruptcy protection is reserved for individuals (and couples filing jointly) who are members of low-income households. Why? Unlike Chapter 13 bankruptcy, Chapter 7 bankruptcy doesn’t require the filer to repay creditors of dischargeable debts. Instead, eligible debts are simply wiped clean once the bankruptcy petition is approved.

Filers of Chapter 7 bankruptcy each have a trustee assigned to their case. This trustee is empowered to sell any of the filer’s assets that are non-exempt. While it is rare that a trustee sells any of a Chapter 7 filer’s assets, if you own luxury property or have significantly valuable holdings, it is worth asking an attorney if you’ll be placing your assets at risk by filing for Chapter 7 bankruptcy.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy involves the creation of a 3-5 year debt repayment plan. The plan is constructed to ensure that monthly debt repayment obligations are manageable. At the end of a successful repayment period, any remaining eligible debt is discharged.

Thanks to The Law Offices of Ronald I. Chorches for their expertise on the subject of bankruptcy.

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