Differences between Chapter 7 and Chapter 13

These chapters are both for individuals who are unable to pay their debt, however there are different benefits to each one.

Why consider Chapter 7 – Liquidation of Assets?

• This type of bankruptcy is mostly helpful when the individual has little property outside of the necessities like furniture, clothing, etc. or when most of their property is exempt.
• The individual is current on the mortgage payments on their home.
• Creditors cannot communicate with the debtor while the automatic stay is in effect or after their debts have been discharged.
• Completed relatively quickly (a few months).

Why consider Chapter 13 – Debt Adjustment?

• This type of bankruptcy is mostly used when the individual has substantial property they want to keep and have a steady income.
• The individual needs to save their home from being foreclosed.
• Creditors cannot communicate with the debtor during the 3-5-year period of the payment plan.
• Allows the individual 3-5 years to repay some (or all) of their debts.