What Is the Difference Between Chapter 7 and Chapter 13?
Posted on Sep 1, 2009 12:42pm PDT
If you are planning to file for individual bankruptcy, you will need to know the difference between
Chapter 7 and
Chapter 13. However, before the differences are outlined, you may want to know what these two types of bankruptcy have in common. First, these are both types that may be filed for by individual consumers. Second, both types of bankruptcy allow people who are struggling financially to have their debts discharged or repayed over time.
Chapter 7 bankruptcy is the most popular type of bankruptcy in the United States. When people file for Chapter 7, they go through what is called "liquidation". Liquidation is the selling of property for profit, which is then turned over to a bankruptcy filer's creditors to repay debts. Items that may be liquidated include homes, cars, property and other material items of value. Once people finish filing for Chapter 7, their debts are officially discharged and they will have a chance to rebuild their finances over time.
Chapter 13 is another type of bankruptcy that consumers may file for. The difference between Chapter 7 and Chapter 13 bankruptcy is that when people file for Chapter 13, they agree to repay their debts over a period of time. By doing this, they also avoid having their property liquidated. In order to file for Chapter 13 bankruptcy, people must meet income requirements to demonstrate that they are financially capable of repaying their debts.
If you have questions about Chapter 7 or Chapter 13 bankruptcy,
click here to find a knowledgeable bankruptcy attorney near you!