What is the difference between Chapter 7 and Chapter 13 in Bankruptcy law?
If non-bankruptcy alternatives are not feasible, most consumer debtors must decide between a Chapter 7 and a Chapter 13 bankruptcy. A Chapter 7 bankruptcy is a “Liquidation” bankruptcy whereby certain debts may be discharged and assets are liquidated to pay the debtor’s creditors. Chapter 7 Bankruptcy cases last about six months before a discharge is granted. A Chapter 13 bankruptcy is a “Debt Adjustment” proceeding whereby the debtor Chapter 13 cases normally last from three to five years, with a discharge granted at the close of the plan. In chapter 13 cases, the attorney’s fees and administration expenses tend to be considerably more than Chapter 7 cases. If anything is likely to occur during the duration of the case that would prevent the person’s ability to make payments under the plan, and/or if a person is not able to fulfill the terms of a Chapter 13 plan during the entire duration of the plan, chapter 13 is generally not advisable.
