What is the difference between a Chapter 7 and a Chapter 13 bankruptcy petition?
To the paralegal or virtual assistant who is focused on preparing the bankruptcy petition, the Forms and Schedules are basically the same in a Chapter 7 as they are in a Chapter 13. Additionally, the Chapter 13 petition does require some additional information as well as a Chapter 13 Plan. The ”Chapter 13 Plan” replaces the ”Individual Debtor’s Statement of Intention” in a Chapter 7. Therefore, all you basically need to learn is how to prepare a Chapter 13 Plan and you will be able to prepare Chapter 13 bankruptcy petitions. Once you learn how to prepare Chapter 13 bankruptcy petitions, you get an immediate raise in salary. Why? Because your attorney will get paid more for a Chapter 13 versus a Chapter 7. There is also more work involved in developing the Chapter 13 Plan for submission to the court and creditors. Because of this additional work, you, the attorney and the bankruptcy court will normally always make more money with a Chapter 13 petition compared to a Chapter 7. Don’t
While a Chapter 7 bankruptcy petition operates to wipe the slate clean or discharge all of the debtors eligible debts, a Chapter 13 bankruptcy allows the person to repay all or a portion of his or her debts under the supervision or protection of the Court which must approve the plan. The debtor must make regular payments to a Bankruptcy Court trustee who then pays the money collected out to various creditors in the manner called for in the plan. After completion of the payments made under the plan, the debtor is released from liability. The major differences between the Chapter 7 and Chapter 13 cases are that in the Chapter 13 cases, a portion of the debtors future income is used to pay as much of the debtors obligations as possible while in a Chapter 7 case, the debtors non-exempt property is liquidated to pay as much of the debtors debts as is possible under the circumstances.
