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Chapter 7 vs. Chapter 13 Bankruptcy

Chapter 7 vs. Chapter 13: What's the Difference?

Everyone going down the debt relief path should understand the differences between Chapter 7 or liquidation bankruptcy and Chapter 13 or reorganization bankruptcy. While the benefits of achieving a clean financial slate can be similar, the two avenues are very different. Keep reading to learn more.

Chapter 7: Discharge Debt Quickly

Liquidation bankruptcy allows you to discharge most if not all of your unsecured debt, including medical debt, credit card debt, and personal loans. Chapter 7 is more straightforward and it is easier. It is also faster: Many filers achieve discharge orders from bankruptcy court in as little as three months. Chapter 7 bankruptcy is the ideal solution for those who cannot afford to pay back what they owe and who need relief from their creditors. Some people will not qualify to file Chapter 7 bankruptcy, however, including those with sufficient income to repay their debt. The "means test" separates those who qualify for liquidation bankruptcy from those who do not.

Chapter 13: Achieve the Time You Need to Repay Your Debt

Chapter 13 or reorganization bankruptcy gives the filer the opportunity to repay at least some of what he / she owes in a repayment plan spread out over three to five years. This option is ideal for those who do not qualify to file for Chapter 7 bankruptcy through the means test.

Other reasons to file Chapter 13 bankruptcy instead of Chapter 7 include:

  • The chance to repay what you owe
  • Stopping a foreclosure proceeding on your home and / or repossession on your car
  • Keeping property that is not exempt from liquidation under Chapter 7
  • The fact that you have debt that can't be discharged through Chapter 7
  • The fact that you have a co-debtor

Call for Help from a Caring Debt Relief Attorney

Our Silver Spring bankruptcy lawyer has been practicing law for years. Our firm is passionate about protecting clients and helping them achieve financial harmony. Contact The Law Office of David Cahn today to learn more about Chapter 7 and Chapter 13 bankruptcy. We look forward to serving you.