What is the difference between Chapter 7 and 13?
Chapter 13 or “reorganization” allows debtors with a steady income to pay off all or part of their debt over a 3 to 5 year period instead of surrendering property. Chapter 7 or “straight bankruptcy” is the most drastic type of bankruptcy. Debtors turn over all of their assets to a court representative for distribution to creditors. Unlike Chapter 13, there is no repayment plan. The court will then declare that legally, the debtors are no longer in debt.
