What are the the differences between Chapter 7 and Chapter 13 Bankruptcy?

Challenging situations arise in peoples lives every day. Some of these circumstances mean that bills can no longer be paid. Individuals may have good intentions of paying their bills, but do not have the means to do so. When this happens, bankruptcy can be a source of relief. Bankruptcy is sometimes the most viable option. The question becomes whether Chapter 7 or Chapter 13 is better to file. We will review your finances to help you determine whether a chapter 7 or chapter 13 is best for you.

Many consumers choose Chapter 7 when filing bankruptcy. Chapter 7 does not require a plan of repayment. Instead, some debt is completely wiped out. If you meet the financial requirements, Chapter 7 is often the best alternative for you.

With Chapter 13 bankruptcy, a repayment plan is put in place to pay back part or all the unsecured debt. This gets handled through the court system, and the payments are made over a period from 36 to 60 months. The amount repaid to creditors will be equal to or greater than what the creditor would receive if the assets were liquidated. If the repayment plan is followed through correctly, the unsecured debt that is remaining is discharged. If you have fallen behind on your house or car payments, Chapter 13 can help keep the assets you have worked so hard to earn.

There are pros and cons to both types of bankruptcy. Before committing to one or the other, speak to us at The Calig Law Firm to review your options.

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