What are the biggest differences between chapter 7 and chapter 13 bankruptcy? 27 Answers as of June 02, 2014

I am trying to figure out the difference between the two to help me decide the best route for me.

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EDWARD P RUSSELL | EDWARD P RUSSELL
Ch. 7 is good for discharging credit card type, i.e., unsecured, debt; Ch. 13 is a wage earners plan good to use if you are behind on payments on a mortgage or a car.
Answer Applies to: Minnesota
Replied: 6/2/2014
LAW OFFICE OF MARGARET L. EVANS, PC
LAW OFFICE OF MARGARET L. EVANS, PC | Margaret L. Evans
In Ch. 7, you are simply liquidating your Schedule F unsecured, non-priority debt and paying nothing towards them. If you obtain a discharge, you'll owe these creditors nothing. HOWEVER, since the bankruptcy act was overhauled in 2005, you must now qualify to file a Ch. 7 under the MEANS TEST with no presumption of abuse arising. In a Ch. 13, you actually pay ALL of your creditors SOMETHING in a plan that must be confirmed by the court. You must have enough DMI (disposable monthly income) to support a confirmable plan. How much you must pay monthly will depend on your income and your debts. You also have many more advantageous tools at your disposal with a Chapter 13, too, such as the ability to pay past due mortgage payments (even if you're in an ongoing foreclosure action), readjust car loans or other secured debts that are 910 days or older, the ability to avoid a judgment lien, pay back taxes through the plan, etc. Question Detail: I am trying to figure out the difference between the two to help me decide the best route for me. - only a consultation with a consumer bankruptcy attorney can help you determine what route is best for you. However, if you're trying to stop a foreclosure sale, repossession of a car, stop an action for back child support or alimony, lowering of secured debt over 910 days old, etc., then Ch. 13 MAY be your best option.
Answer Applies to: South Carolina
Replied: 5/28/2014
Rhymer Law Firm
Rhymer Law Firm | William Rhymer
Basically a Chapter 7 wipes out most debts. There are some debts that cannot be wiped out.
Answer Applies to: Georgia
Replied: 5/27/2014
Law Office of Susan G. Taylor
Law Office of Susan G. Taylor | Susan G. Taylor
Chapter 7 bankruptcy: 3 months, pay the value of your non-exempt property (probably nothing) to discharge all unsecured, nonpriority debt. Chapter 13 bankruptcy: pay something each month, at least the value of your non-exempt property or the amount of disposable income you have according to your budget and/or the means test, for THREE to FIVE YEARS, to discharge unsecured, nonpriority debt. There are, of course, advantages of each chapter. You need to consult an attorney.
Answer Applies to: Texas
Replied: 5/27/2014
Eranthe Law Firm
Eranthe Law Firm | Cate Eranthe
There are many differences between a Chapter 7 and Chapter 13 bankruptcy. Bankruptcy is not a do-it-yourself project. Once the bankruptcy filing has been messed up it will be very difficult to find an attorney to fix it for you. My advice is to see a local knowledgeable bankruptcy attorney before you file anything and preferably have them take the case for you. A Chapter 13 bankruptcy has debt limits Chapter 7 does not. A Chapter 7 bankruptcy will liquidate any unexempt assets. In a Chapter 13 you can pay the value of those assets into the state. Generally a Chapter 7 lasts 4 to 6 months and a chapter 13 takes 2 to 5 years. A Chapter 7 is considered a liquidation and a chapter 13 a reorganization of your debts. In order to make a plan to repay some of the debt in a chapter 13 you must have income left each month. There are things you can do in a chapter 13 that you cannot do in a Chapter 7 such as strip an unsecured second mortgage. There are many other significant and less significant differences between the two chapters. Please get legal advice based on your specific facts. No one can tell you in an online question and answer form which chapter is right for you.
Answer Applies to: California
Replied: 5/23/2014
    David R. Fondren, Attorney at Law
    David R. Fondren, Attorney at Law | David R. Fondren
    They are completely the opposite of each other. One is a liquidation of assets. The other is a re-payment plan. One pays back creditors with non-exempt property and the other pays creditors based on your income and ability. The rest of the differences are to numerous to go into here. This is a very important decision with significant consequences. You should speak to an attorney.
    Answer Applies to: Missouri
    Replied: 5/22/2014
    The Law Office of Mark J. Markus
    The Law Office of Mark J. Markus | Mark Markus
    The only way to determine that is to have a comprehensive consultation with an experienced bankruptcy attorney. There are lots of differences between Chapter 7 and Chapter 13. Primarily, you have to make some payments to your creditors in a Chapter 13, and not in a Chapter 7. However, in a Chapter 7 you give up any non-exempt assets that you have. Determining whether you have any non-exempt assets is obviously critical to the analysis. The amount you have to pay out in a Chapter 13 depends on a number of different factors, including the value of your assets, the amount of your income received in the 6 months prior to filing, as well as your income and expenses on the date your case is filed, what priority debts (such as domestic support obligations, taxes, mortgage arrears) must be paid in full through your plan, etc. In short, you need a competent attorney to help you make such a decision.
    Answer Applies to: California
    Replied: 5/22/2014
    Baner & Associates | Sandra M Baner
    There are many differences between Chapter 7 and Chapter 13 however we generally consider Ch13 instead of Ch7 if: 1. You are behind on your mortgage payments and want to keep your home, 2. You owe significant back taxes which cannot be discharged, 3. You are eligible to "cram down" on vehicle loans, and/or 4. You fail the Means Test or have significant disposable monthly income There may be other reasons to file Ch13 vs Ch7 and I strongly suggest you meet with an experienced attorney before making the decision.
    Answer Applies to: Wisconsin
    Replied: 5/22/2014
    The Law Office of Darren Aronow, PC
    The Law Office of Darren Aronow, PC | Darren Aronow
    Chapter 7 will wipe out all of your unsecured debts such as credit cards, medical debts, etc and Chapter 13 will be a repayment plan of some or all of your debts.
    Answer Applies to: New York
    Replied: 5/22/2014
    Barnhart Law Office
    Barnhart Law Office | Bruce C Barnhart
    A chapter 7 is usually completed in a matter of 4-5 months, attorney fees are paid prior to the filing, the person filing is responsible for future vehicle payments (if you want to keep the vehicle), and a chapter 7 trustee may be able to sell certain assets. A chapter 13 will last 3-5 years, requiring monthly payments. The payments are used to pay off any vehicle loans. Chapter 13 Trustee do not take assets. A chapter 13 has a super discharge that can wipe out debts that can not be wiped out in Chapter 7.
    Answer Applies to: Nebraska
    Replied: 5/22/2014
    The Law Office of M Grater LLC
    The Law Office of M Grater LLC | Mark O. Grater
    A Chapter 7 give you a fresh start. A Chapter 13 requires a payment to the court each month for the next three to five years.
    Answer Applies to: Connecticut
    Replied: 5/22/2014
    Idaho Bankruptcy Law | Paul Ross
    There are a large range of reasons why a person would choose a Chapter 13 over a Chapter 7 (if not forced into a 13). But each of these scenarios will be unique to each set of facts. Therefore, the biggest differences will depend heavily on the facts of your case.
    Answer Applies to: Idaho
    Replied: 5/22/2014
    Stephens Gourley & Bywater | David A. Stephens
    In a chapter 13 you repay a portion of your debts by a monthly payment for 36 to 60 months to the trustee. It also has a broader discharge than chapter 7.
    Answer Applies to: Nevada
    Replied: 5/21/2014
    John Ceci PLLC
    John Ceci PLLC | John Ceci
    Chapter 7 gets rid of most debts, takes less time and usually costs less. Chapter 13 requires monthly payments to the trustee and the payments will have to be made over 3 to 5 years. But Ch. 13 protects more assets. Without more information it is impossible to tell you whether one is better for you than the other.
    Answer Applies to: Michigan
    Replied: 5/21/2014
    Law Office of Peter M. Lively
    Law Office of Peter M. Lively | Peter M. Lively
    In a nutshell, Chapter 13 is a reorganization with a payment plan and Chapter 7 is a liquidation without a payment plan. You should consult with a bankruptcy attorney regarding your financial circumstances so that you have guidance in evaluating your options.
    Answer Applies to: California
    Replied: 5/21/2014
    A Fresh Start
    A Fresh Start | Dorothy G Bunce
    1) Can you afford to make payments on debts for 3 - 5 years? 2) Have you got debts that are not eligible to be eliminated in a Chapter 7, such as tax debts, child support, alimoney? 3) Do you need time to pay back past due debts on property in order to retain the property? 4) Do you qualify for lienstripping to remove a second mortgage?
    Answer Applies to: Nevada
    Replied: 5/21/2014
    TJB Law, LLC
    TJB Law, LLC | Troy Bird
    There are a number of differences, I'd encourage you to meet with an attorney to learn how each would apply to your situation. The short answer is: a chapter 7 is a liquidation of assets and a discharge of most debts (child support and back taxes are some that can't be discharged), while a chapter 13 establishes a plan to repay some or all of your debts, while allowing you to keep more of your assets.
    Answer Applies to: Nebraska
    Replied: 5/21/2014
    LAW OFFICE OF DAVID A. KUBAT
    LAW OFFICE OF DAVID A. KUBAT | DAVID A. KUBAT
    There are several major differences between Chpt. 7 and Chpt. 13. Chpt. 7 bankruptcies are designed for people who cannot afford to pay anything to their unsecured creditors (credit cards, medical bills, past due rent or utilities, etc.). If you can afford to pay your creditors anything, after paying your normal, reasonable monthly living expenses, then you cannot do a Chpt. 7. Another big consideration with Chpt. 7: If you have any assets that are worth more than you can exempt under your available state or federal exemptions, the Chpt. 7 Trustee will take the asset and sell it to pay creditors. In Chpt. 13, that is very unlikely to happen; however, you will need to make monthly payments to the Chpt. 13 Trustee based on several factors, including how much you can afford to pay your creditors, and whether your assets exceed your available exemptions. There are other factors that need to be taken into account, so all this is more complicated than I can write here.
    Answer Applies to: Washington
    Replied: 5/21/2014
    Law Office of Thomas Denny
    Law Office of Thomas Denny | Thomas Denny
    The general difference between Chapter7 and Chapter 13 is that Chapter 7 enables you to dischargeyour unsecured debts completely while Chapter 13 requires you to repay a portionof your unsecured debts over time, and then have the remaining portiondischarged. In respect to secured debts, under Chapter7, if you wish to keep your home or your car you will need to continue to makeyour mortgage and/or car payments. On the other hand, Chapter 13 bankruptcyallows you to avert foreclosure of yourhome or repossession of your car by extending the delinquent payments over thelife of the repayment plan.
    Answer Applies to: New York
    Replied: 5/21/2014
    Law Office of Shirly L. Horn | Shirley L. Horn
    Essentially, Chapter 7 is a liquidation bankruptcy and Chapter 13 is a reorganization. There are a lot of factors involved in determining which one is right for you. I advise that you set up a free consult with an attorney.
    Answer Applies to: Michigan
    Replied: 5/21/2014
    Garner Law Office
    Garner Law Office | Daniel Garner
    This is a question more easily answered during a free consultation to assess your financial situation and what is in your best interest. Many variables must be considered. In general, most people prefer a Chapter 7 if they can qualify because it's the quickest and least expensive. People who have relatively high income or a lot of assets are usually forced to do a Chapter 13 based on the mandatory "means test." Prior bankruptcy filings also may have an impact on the decision. The bankruptcy exemptions and most of the paperwork are the same under either chapter, but a Chapter 13 requires a longer term commitment, typically at least 3 years, while a Chapter 7 can be filed and discharged within about 3 months. Your assets, your income, your household size and many other factors all go into the decision. Many attorneys, such as myself, offer a free consultation to help you make the best possible decision whether or not you decide to hire them.
    Answer Applies to: Oregon
    Replied: 5/21/2014
    Janet A. Lawson Bankruptcy Attorney
    Janet A. Lawson Bankruptcy Attorney | Janet Lawson
    You make payments in ch13. Sometimes you must file a ch13, (too much income, too many assets). Sometimes you need a ch13 (pay taxes, catch up on mortgage payments). So what chapter you chose depends on the facts of your case.
    Answer Applies to: California
    Replied: 5/21/2014
    GARCIA & GONZALES, P.C.
    GARCIA & GONZALES, P.C. | Richard N. Gonzales
    In a Chapter 7 you receive a discharge of most debts, and the case is closed within 4 months. In a Chapter 13 you make payments for 36 to 60 months, depending on your budget. Most Chapter 13's are filed because a house is in foreclosure, or the debtor owes more then $5,000 in tax liability which is not dischargeable (this is NOT to say taxes are not dischargeable). Sometimes debtors are forced into a Chapter 13 because they are high income earners. Also, Chapter 13's provide much more flexibility on what property can be kept by the debtor (as opposed to a Chapter 7 Trustee taking the property and selling it for the benefit of the creditors). There are other significant differences. Suffice it to say, get with an experienced bankruptcy attorney for a consultation.
    Answer Applies to: Colorado
    Replied: 5/21/2014
    Law Office of Stuart M. Nachbar, P.C.
    Law Office of Stuart M. Nachbar, P.C. | Stuart M. Nachbar
    Simply put, do you have anything, such as equity in a house to protect or are you in arrears on a mortgage. Chapter 13 allows you to clean up arrears, Chapter 7 does not.
    Answer Applies to: New Jersey
    Replied: 5/21/2014
    Law Office of Andrew Oostdyk
    Law Office of Andrew Oostdyk | Andrew Oostdyk
    Chapter 13 includes a repayment plan where you are paying a percentage of your unsecured debt through a Bankruptcy Plan for up to five years. Chapter 13 is useful if you are behind on mortgage or car payments, as the plan allows you to catch up on your payments while keeping your home and/or vehicle. Chapter 7 does not include a payment plan, and will discharge all of your unsecured debt, and may give you the option off continuing to pay your secured debt. You must meet the applicable requirements to qualify for Chapter 7 relief.
    Answer Applies to: Texas
    Replied: 5/21/2014
    Patrick W. Currin, Attorney at Law | Patrick Currin
    Home ownership is often the biggest factor. If you are behind on your mortgage and want to keep your home 13 allows you to spread your back debt over time. Assets, total debt and income are the other factors . Bankruptcy is not a DIY friendly field of law, consult an experienced attorney.
    Answer Applies to: California
    Replied: 5/21/2014
    Mauritz Van Niekerk, Attorneys at Law
    Mauritz Van Niekerk, Attorneys at Law | Christiaan van Niekerk
    One is total liquidation and the other is a repayment plan for payments that you need time to catch up on.
    Answer Applies to: New York
    Replied: 5/21/2014
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