Bankruptcy what is chapter 7 and 13

The case will involve placing all of your non-exempt property into a trust in the care of a designated trustee. The trustee has the authority to sell all of this non-exempt property to repay your creditors. Generally, it gives the opportunity for a fresh start within a few months of filing. Then the bankruptcy court discharges the remaining debt.

This effectively allows the filing party to repay their debt for much less than they owe. The tradeoff is that Chapter 7 requires liquidating a great deal of property. Chapter 13 does not provide debt relief as quickly as Chapter 7 can, but it does allow the filing party to retain ownership over most of their property and assets.

If you believe that Chapter 13 is more suitable for you, you must ensure that you can file for Chapter 13 before starting the process. You and your attorney must fill out a financial disclosure package that includes complete and accurate records of all your assets, debts, and property in order to start Chapter 13 proceedings.

You will be allowed to keep your property as long as the bankruptcy court approves your proposed debt repayment plan. An experienced Chapter 13 bankruptcy attorney is your best resource if you need help developing your plan. Once you complete all of your repayments under the terms of an approved plan, your debts are discharged.

Chapter 13 can allow you to lower the principal owed on secured debts if you qualify, and you may also be eligible to have unsecured junior liens from your real property stripped.

During your repayment term, you must remit your scheduled repayments to your designated trustee on time, and you can retain ownership over most of your assets and property.

The drawback to Chapter 13 bankruptcy is that you will need to continue making payments every month until you complete your repayment term. This will mean parting with the majority of your disposable income every month. Depending on your circumstances and the amount of debt you owe, you may not have a choice as to what type of bankruptcy filing option is available to you.

This is another reason it is important to work with an experienced bankruptcy attorney if you intend to pursue any bankruptcy status.

Your attorney can review your debts and help you determine whether you have options for your bankruptcy filing. Typically, Chapter 7 bankruptcy is better for low-income debtors.

In contrast, Chapter 13 bankruptcy is more suited to those who simply need some extra time and flexibility to catch up on missed payments. Ultimately, it is always best to consult an attorney to determine which bankruptcy filing option is best for you. Technically, you do not need to hire an attorney to file for bankruptcy. However, hiring legal counsel to assist you with the process will make it much easier. It will increase your chances of securing the best type of bankruptcy status for you.

It is much easier to handle this process when you have an experienced attorney assisting you. Your bankruptcy attorney will help you prepare for your bankruptcy court proceedings, from your initial petition to all the hearings you will need to attend throughout your case proceedings. Bankruptcy filing is a complex process, and any errors made during the initial phase of your bankruptcy case can significantly increase the time required for the bankruptcy case to unfold.

Chapter 13 : An individual with a regular income who is overcome by debts, but believes such debt can be repaid within a reasonable period of time, may file under chapter 13 of the bankruptcy code.

Chapter 13 permits the debtor to file a plan in which the debtor agrees to pay a certain percentage of future income to the bankruptcy court trustee for payment to creditors. If the court approves the plan, the debtor will be under the court's protection while repaying such debts. More information regarding the difference between chapters can be found in the Bankruptcy Basics Manual. Jump to Content. Chapter 7 is an option to consider if you have little to no disposable income.

That means the money you were paying toward that loan or credit card, for example, can now be used for other things, like household necessities. Note that there are a number of exceptions to the debts that can be discharged in Chapter 7, so we recommend contacting a bankruptcy lawyer before you file. When you file, some of your creditors may be temporarily restricted from …. Where Chapter 13 bankruptcy typically takes three to five years to complete, Chapter 7 generally takes about 90 to days from start to finish, in addition to the time it takes to complete a credit counseling course prior to filing.

One of the main consequences of filing Chapter 7 is the possible loss of your assets. Depending on the laws in your state, and whether you have equity in certain assets, your cash or property will be at stake. The other major consequence of a Chapter 7 bankruptcy is the impact to your credit. A Chapter 7 bankruptcy can stay on your credit reports for up to 10 years from the date you file.

Chapter 13 is a bankruptcy option to look at if you own property that you want to keep. In this case, Chapter 13 could be the right option for you. Attorney Andrea Wimmer. Andrea practiced exclusively as a bankruptcy attorney in consumer Chapter 7 and Chapter 13 cases for more than 10 years before joining Upsolve, first as a contributing writer and editor and ultimately joining the team as Managing Editor.

While in private practice, Andrea handled Take our screener or read our bankruptcy F. Upsolve is a c 3 nonprofit that started in Our mission is to help low-income families who cannot afford lawyers file bankruptcy for free, using an online web app. Spun out of Harvard Law School, our team includes lawyers, engineers, and judges.

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We are funded by Harvard University, will never ask you for a credit card, and you can stop at any time. Free Articles. Bankruptcy Tool. Filing Guide. In a Nutshell Chapter 7 bankruptcy vs. Written By:. Attorney Andrea Wimmer Twitter LinkedIn Andrea practiced exclusively as a bankruptcy attorney in consumer Chapter 7 and Chapter 13 cases for more than 10 years before joining Upsolve, first as a contributing writer and editor and ultimately joining the team as Managing Editor.

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