Chapter 7 vs. Chapter 13 Bankruptcy

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Are you faced with the situation of owing more than you can actually pay back? Are creditors calling you all day? Are you at risk of losing your home? When non-bankruptcy options are no longer feasible, the decision to file bankruptcy could be at the top of your list.

While it's no doubt that you've heard of bankruptcy before, terms such as "Chapter 7" and "Chapter 13" could be confusing. What is the difference between the two types of bankruptcy and what do they really mean?

Chapter 7 bankruptcy, also known as personal bankruptcy, straight bankruptcy or total debt liquidation, can help individuals eliminate credit card debt, judgments, medical bills and other types of debt. It is designed to assist individuals or small businesses liquidate assets and repay creditors to resolve financial disputes. Chapter 7 bankruptcy works by allowing the debtor to turn over all non-exempt property to the bankruptcy trustee who converts it to cash for distribution to the creditors. Within 4 months, the debtor usually receives a discharge of all dischargeable debts.

Chapter 13 bankruptcy, also known as the "wage earner's plan", reorganization bankruptcy or debt restructuring, can help individuals eliminate tax debt, credit card debt, medical bills, car loans, and other types of debt. This type of bankruptcy is typically filed by individuals who have significant assets and plan to keep them. Rather than eliminating debts, Chapter 13 bankruptcy sets a 3-5 year schedule for you to pay off your debtors.

Chapter 13 bankruptcy cases are a lengthier, more involved process than chapter 7 bankruptcy cases, so it pays to have a bankruptcy lawyer at your side who is experienced in resolving issues quickly and accurately.

If you are worried about your financial status and feel bankruptcy may be a solution, Attorney Search Network can refer you to the right bankruptcy lawyer. Call us now and we can connect you with a bankruptcy lawyer that can help with your bankruptcy case.

If you have any questions about the information provided above, please contact Attorney Search Network.

Contact Attorney Search Network for an Attorney Referral to an pre-screened Bankruptcy Lawyer.

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