What is the difference between a Chapter 7 bankruptcy case and a Chapter 13 bankruptcy case?
A Chapter 7 case is designed to allow you to eliminate most unsecured debts, such as credit cards, medical bills, and other consumer debts. If you have secured loans, such as a car payment or a house payment, these loans should be current at the time you file a Chapter 7 case, because a Chapter 7 case generally will not change the rights of these secured creditors if you want to keep the collateral for these loans. Most people who file a Chapter 7 case continue paying on their cars and houses, and are only seeking to eliminate their credit card debt or medical bills. A Chapter 13 case is designed to facilitate a structured repayment over time to your creditors, which will usually be much more affordable to a person than if he/she was not in bankruptcy. The three main reasons that a person might want to file for protection under Chapter 13 are: 1. Foreclosure – You are behind on your house payments or car payments and the creditor is threatening to foreclose. This is the most common rea
The key main difference between Chapter 7 and Chapter 13 bankruptcies is that in Chapter 7, for a majority of people, you are able to keep all of your property, not pay anything to your creditors (through the use of exemptions), and wipe out your unsecured debt. In Chapter 13, you can generally keep your property, but have to create a payment plan for three to five (3-5) years to pay off a portion of your debts.
Chapter 13 can be essential for the debtor seeking to retain a car or a house. Most people want to be in Chapter 7 for the simple reason that paying nothing is usually better than paying something.
If you have further questions on the differences between the various chapters of bankruptcy, contact the Henshaw Law Office today.
