If you are struggling with debt and considering bankruptcy, you may wonder which type of bankruptcy is best for your situation. In this blog post, we will explain the main differences between Chapter 7 and Chapter 13 bankruptcy, and how they affect your eligibility, discharge rate, property, and repayment plan.
Chapter 7 bankruptcy is also known as liquidation bankruptcy, because it involves selling some of your assets to pay off your creditors. Chapter 7 is usually faster and cheaper than Chapter 13, but it also has stricter income requirements and may result in losing some of your property. Chapter 7 is suitable for people who have little or no income and few assets.
Chapter 13 bankruptcy is also known as reorganization bankruptcy, because it involves creating a repayment plan to pay back some or all of your debts over three to five years. Chapter 13 is usually longer and more expensive than Chapter 7, but it also allows you to keep most of your property and catch up on missed payments. Chapter 13 is suitable for people who have regular income and valuable assets.
The following table summarizes some of the key differences between Chapter 7 and Chapter 13 bankruptcy:
Chapter 7 Bankruptcy
Chapter 13 Bankruptcy
To learn more about the pros and cons of each type of bankruptcy, you should consult a qualified bankruptcy attorney who can advise you on the best option for your specific case.