Chapter 7 Bankruptcy vs. Chapter 13 Bankruptcy
There are two main ways to file personal bankruptcy under the U.S. Bankruptcy Code: Chapter 7 and Chapter 13 bankruptcy.
Discover which type of bankruptcy may help you, then click below to talk to a local bankruptcy lawyer about your eligibility to file:
CHAPTER 7(Discharge Unsecured Debts) |
CHAPTER 13(Interest-Free Repayment Plan) |
| Chapter 7 is commonly used when: |
Chapter 13 is commonly used when: |
| You have little property except for the basic necessities like furniture and clothing. |
You have significant equity in a home or other property and you want to keep it. |
| You have little or no money left after paying basic expenses each month—or you're not even meeting basic expenses. |
You have regular income and can pay your living expenses, but you can't keep up the scheduled payments on your debts. |
| Advantages of Chapter 7: |
Advantages of Chapter 13: |
| Most unsecured debts can be discharged (completely eliminated) |
You can keep most of your property while spreading out time to pay past due accounts |
| The process moves quickly—you may receive your discharge in just a few months |
You'll have 3-5 years to catch up delinquent accounts according to a schedule that you and the bankruptcy trustee have agreed is workable for you. |
| Creditors can't contact you while the automatic stay is in effect—or after debts are discharged. |
You'll make one monthly payment to the bankruptcy trustee for distribution—you'll have no direct contact with creditors during the protection period of 3-5 years. |
| |
Co-signers may be protected |
| Who can file under Chapter 7? |
Who can file under Chapter 13? |
| Debtors who have qualified under the 'means test' and completed a required pre-filing session with a credit counselor may file for Chapter 7 bankruptcy protection. |
Any individual debtor whose unsecured debts are below $336,900 and whose secured debts are less than $1,010,650. |
| Learn More About Chapter 7 » |
Learn More About Chapter 13 » |
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The above summary of personal bankruptcy laws is by no means all-inclusive and is not intended to serve as legal advice. Bankruptcy laws may have changed since our last update. For the latest information on bankruptcy laws, speak to a local bankruptcy lawyer in your state.