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.

Three Significant Differences Between Chapter 7 Bankruptcy and Chapter 13 Bankruptcy :

  • Chapter 13 bankruptcy has no income limitations, but certain income limits are put in place for those seeking Chapter 7 bankruptcy protection.
  • An approved Chapter 7 bankruptcy plan eliminates many forms of unsecured debt, while Chapter 13 bankruptcy sets up a repayment plan.

Many other differences exist, and the Columbus, Ohio-based Chapter 7 bankruptcy attorneys with the Calig Law Firm discuss several below. You can have all your questions answered, and get help with your bankruptcy case, by calling us as (614) 252-2300. We also take appointments for consultations online through this contact form.

3 Other Ways Chapter 7 Bankruptcy Differs From Chapter 13 Bankruptcy

  • You can only file for Chapter 7 bankruptcy protection once every eight years. On the other hand, you can file a new Chapter 13 bankruptcy petition as often as you need to do so.
  • A Chapter 7 bankruptcy petition discharges credit card debt, medical bills, and unsecured personal loans. A Chapter 13 bankruptcy requires a portion of those obligations to be paid back.
  • If your mortgage is current, you will be able to keep your home in a Chapter 7 or Chapter 13. However, if the mortgage is behind, the court will only allow you to keep the home in a Chapter 13.

3 Other Ways Chapter 13 Bankruptcy Differs From Chapter 7 Bankruptcy

  • You must submit a detailed financial reorganization plan that explains how you will pay all the debts creditors did not forgive.
  • You have the choice to surrender property that you financed or to negotiate with lenders to reset the terms on the loans.
  • While you are under Chapter 13 protection, you make a monthly payment to a trustee who uses the money to make payments to creditors according to the plan you put together with the help of your Columbus Chapter 13 lawyer.

4 Ways Chapter 7 Bankruptcy and Chapter 13 Bankruptcy Are the Same

  • Filing for bankruptcy protection stops all collection and foreclosure actions.
  • You will still owe child support, spousal support, unpaid taxes, and/or criminal fines.
  • The bankruptcy will remain on your credit report for a few years, but you will be able to build your credit score at a fast rate.

You have the legal right to consult with, work with, and be represented by a Columbus, Ohio, bankruptcy attorney at all stages of the application, negotiation, hearing, and debt repayment process.

A Chapter 7 bankruptcy typically lasts about 4 months from start to finish, where a Chapter 13 typically takes anywhere between 3 and 5 years.

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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