What is the difference between chapter 7 and chapter 13 bankruptcy? How? 14 Answers as of May 19, 2015

I am looking into bankruptcy as an option for myself, and I do not understand the difference between chapter 7 and chapter 13. Can someone explain it to me? Thanks.

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GARCIA & GONZALES, P.C. | Richard N. Gonzales
Your needs would better be met by meeting with a lawyer face to face. I do a detailed explanation, and the meeting takes an hour. I have successfully filed THOUSANDS of bankruptcies, so I know all of your questions (and questions you never thought of). I charge a small fee for the meeting. Plus there is lots of information at my website.
Answer Applies to: Colorado
Replied: 5/19/2015
A Fresh Start
A Fresh Start | Dorothy G Bunce
Chapter 7 wipes out most kinds of debts while Chapter 13 is a debt repayment or settlement plan requiring payments through a trustee for up to 5 years. There is usually a specific goal in a Chapter 13 that is not available in a Chapter 7, such as paying off mortgage arrearages or tax debt. Chapter 13 does not require a full repayment of debts, but the amount to be paid is determined on a case by case basis. Usually the numbers do the talking. Someone files Chapter 7 because they have little to no money available after paying living expenses to put towards paying debt, whereas someone files Chapter 13 because they have money available to pay debt.
Answer Applies to: Nevada
Replied: 5/18/2015
Janet A. Lawson Bankruptcy Attorney
Janet A. Lawson Bankruptcy Attorney | Janet Lawson
In chapter 7 you have income below the state "median" (the average income) and you have assets that are "exempt" - meaning the trustee can not have them for the benefit of your creditors. Every state has a list of things you can keep that your creditors can not take away from you. If chapter 13 is required - you make too much money or you have more assets than allowed. You have up to 60 months to pay the excess value of your assets OR you may have to file ch13 because you make too much money to be in chapter 7. The calculation is tricky so I strongly suggest you have a lawyer look at this. Sometimes people opt to be in ch13 because they have tax debt or more commonly, they are behind on mortgage payments and need to get caught up to avoid foreclosure. You may find a lawyer at nacba.org.
Answer Applies to: California
Replied: 5/15/2015
Rhymer Law Firm
Rhymer Law Firm | William Rhymer
There are many differences between the two. However, in a nutshell, a Chapter 7 is usually a wipe out of most if not all debts. A chapter 13 is a plan for paying your creditors back either all or a portion of what you owe them. Bankruptcy cases are like snowflakes, each one is different. I would recommend you get a free consultation from an experienced bankruptcy attorney. He or she can usually tell you to the dollar what would be best and why if you give them accurate information about your situation.
Answer Applies to: Georgia
Replied: 5/15/2015
Michael J. Duggar, P.A.
Michael J. Duggar, P.A. | Michael J. Duggar
Chapter 7 is usually geared toward those getting rid of their unsecured credit cards, personal loans, medical bills and the like, whereas a Chapter 13 is a reorganization used to stop foreclosure, pay non-dischargeable federal tax debts, or provide an option for those debtors who own too many assets to afford a Chapter 7 or make too much money to qualify for Chapter 7. Chapter 13 lasts 3 to 5 years versus 4 months for a Chapter 7 so attorney's fees are usually triple the cost for a 13. Hope this helps! Good luck!
Answer Applies to: Florida
Replied: 5/14/2015
    The Law Office of Darren Aronow, PC
    The Law Office of Darren Aronow, PC | Darren Aronow
    Chapter 7 is full discharge of unsecured debts and chapter 13 is a repayment plan of some or all of the debts
    Answer Applies to: New York
    Replied: 5/14/2015
    Law Office of Michael Johnson
    Law Office of Michael Johnson | Michael Johnson
    Please contact a bankruptcy attorney in your area and you should be able to speak to them and can explain the difference.
    Answer Applies to: Florida
    Replied: 5/14/2015
    Garner Law Office
    Garner Law Office | Daniel Garner
    A chapter 7 is the quickest and least expensive way to go. It is known as a straight liquidation because you liquidate all your debts and your non-exempt assets. The exemptions for various assets are set by the states, although the states can also choose to use the federal exemptions. If you have assets exceeding the exemptions, it is possible to pay the non-exempt value over time in a chapter 13, and keep the assets. Since 2006, there is an income limit for chapter 7 and generally if you are above the median income for your geographic area, you are required to file under chapter 13. This requires you to pay a portion of your debts monthly over a 3 to 5 year period, based upon your ability to pay as defined by census bureau standards. You can always elect to file under chapter 13 but you have to qualify for chapter 7. Since chapter 13 involves monthly payments, of course you have to have a steady source of income, but just about anything qualifies including unemployment benefits or any kind of retirement income. Many bankruptcy lawyers offer a free consultation and all bankruptcy lawyers are required to explain the differences between the two chapters, and how they would affect you. It is always wise to consult with an experienced attorney before making such a major decision as filing for bankruptcy. An ethical attorney will not pressure you to file bankruptcy if it is not in your best interest.
    Answer Applies to: Oregon
    Replied: 5/14/2015
    Ronald K. Nims LLC | Ronald K. Nims
    Chapter 7 allows your to discharge all your debts. Chapter 13 requires payments over 3 to 5 years but would allow you to keep an asset like a house
    Answer Applies to: Ohio
    Replied: 5/14/2015
    Patrick W. Currin, Attorney at Law | Patrick Currin
    Chapter 7 is 4 months as opposed to 5 years and less expensive so if one qualifies it is a better choice. If you own a home chapter 13 can offer important features however. Talk to a qualified attorney.
    Answer Applies to: California
    Replied: 5/14/2015
    Deborah F Bowinski, Attorney & Counselor at Law | Debby Bowinski
    A chapter 13 case is a partial repayment plan with some amount of a monthly payment that is paid to a 3rd party trustee for a minimum of 36 months and a maximum of 60 months. A chapter 13 can offer some advantages over a chapter 7 in certain situations, and it is also often available to those who are not eligible for chapter 7 relief. A chapter 7 case is a much shorter process but has more limited eligibility rules and can lead to the loss of some assets in some circumstances.
    Answer Applies to: Colorado
    Replied: 5/14/2015
    Marc S. Stern
    Marc S. Stern | Marc S. Stern
    A chapter 7 is a liquidation. The court appoints a trustee who liquidates all of the non-exempt property for the benefit of creditors. Exemptions vary from state to state and properly doing exemption planning is one of the most important reasons to hire a bankruptcy lawyer. A chapter 13 is a method of using future income to pay existing debt. It is somewhat more complex in the implementation but that is essentially what happens. A plan is prepared that sets forth the amount being paid, to whom it is going and a myriad of other things. A chapter 11 is a procedure for people with many more problems and liabilities than anyone who can fit within the debt limitations of a chapter 13.
    Answer Applies to: Washington
    Replied: 5/14/2015
    Richard B. Jacobson & Associates, LLC | Richard B. Jacobson
    In a typical Ch. 7, about 90 days pass between the date you file the petition and the time the court issues the discharge (which is the goal of the whole thing) In a Ch. 13, the time period is usually either 36 or 60 months. In a 7 you almost never have to give up any property to the Trustee or creditors, whereas in a Ch. 13 you make monthly payments to a Trustee, who disburses the funds in accordance with a Plan which you file at the beginning of the case, and which the Judge must confirm. It's always a good idea to retain an experienced bankruptcy lawyer to advise and represent you. Good Luck.
    Answer Applies to: Wisconsin
    Replied: 5/13/2015
    Bensamochan & Poghosyan LLP | Eric Bensamochan
    Although there is much more involved, the main differences are that chapter 13 is used to reorganize certain types of debt by way of a payment plan. This is the best chapter when you, for example, have fallen behind on mortgage payments. The plan can be used to repay the missed payments (arrears), thereby letting you keep your house. Chapter 7 is a liquidation of non exempt assets.
    Answer Applies to: California
    Replied: 5/13/2015
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