What is the difference between Chapter 7 bankruptcy and Chapter 13 bankruptcy?
In Chapter 7 bankruptcy, if you qualify, your unsecured debts with certain exceptions are discharged, which means you do not ever have to pay those debts. In Chapter 7, you are allowed to keep certain exempt real and personal property. Property that is not exempt can be taken from you to pay your creditors. In Chapter 13 bankruptcy, you pay all or a percentage of your debts over a period up to five years. The amount you pay your creditors is determined primarily by your disposable monthly income. In Chapter 13 bankruptcy, you can keep assets that are worth more than your allowed exemptions. However, you will not be allowed to keep luxury items you are paying for, or investment rental properties that have a negative cash flow.
