What's the difference between Chapter 7 or Chapter 13 Bankruptcy?

Question

I'm filing for bankruptcy...I'm not sure which to file under. 7 or 13?

Answer 1

The filing generally depends on the person's financial situation. Reportedly, the most common filing is Chapter 7. Companies, married couples and individuals are allowed to file Chapter 7.

A debtor filing Chapter 7 is essentially scrapping everything and starting over, hoping for a clean financial slate. Basically what happens is that once the filing is underway, an administrator or trustee is appointed to maneuver the sale of the debtor's assets. This does not necessarily mean that everything the person owns is sold. Both federal and state laws allow for certain exemptions, meaning that the debtor might get to keep some property, such as his or her primary residence or personal items like clothing. Once the debtor's assets are liquidated, the trustee pays certain creditors a portion of the money raised. Obviously, not all of the creditors receive money from the proceeds, so many of those financial obligations are "forgiven," or discharged. Once someone has filed for bankruptcy under Chapter 7, he or she cannot file again for seven years, and debts that were not forgiven in a previous filing will not be discharged in the next filing.

It is important to note that there are certain debts for which the debtor will receive no forgiveness. Alimony, child support and taxes are not discharged under any bankruptcy filing, and student loans are seldom discharged (see this page for details). So, if a lot of your debt falls into these categories, you might be better off filing Chapter 13.

Chapter 12 and Chapter 13 are basically the same filing, except that Chapter 12 is for family farmers and Chapter 13 is for other individuals. As long as you have a steady, reliable income, less than $269,250 in unsecured debt and less than $807,750 in secured debt, you can file Chapter 13. Once the filing is made, the debtor is assigned a trustee. The debtor and trustee develop a proposal for a repayment plan. The court decides whether to accept or alter the plan or dictate another repayment plan altogether. Once the plan is decided upon, it can last anywhere from three to five years.

You may be wondering why someone would file for Chapter 12 or 13 instead of Chapter 7. There are a couple of reasons for this:

* Under Chapter 12 and 13 filings, debtors do not have to liquidate their assets -- they actually get to keep everything, not just the items that meet the legal exemption.
* In most Chapter 12 and 13 cases, the debtor is repaying only a percentage of what he or she actually owes -- sometimes as little as 30 cents to 50 cents on the dollar!

Answer 2

Chapter 7, you don't have to pay, Chapter 13, you do. Talk to an attorney to find out which one is best for you. Not everyone can file a Chapter 7.

Answer 3

Chapter 7 you pay nothing, Chapter 13 you pay some.

Answer 4

Here are some info which would help you:

Information on Chapter 7 Bankrupt
http://www.get-out-of-the-debt-trap.com/category/Information-on-Chapter-7-Bankrupt.html


Information on Chapter 13 Bankrupt
http://www.get-out-of-the-debt-trap.com/category/Information-on-Chapter-13-Bankrupt.html

Answer 5

chapter 7 you wipes out all your debt and you start all over chapter 13 you keep your car and house and just pay a lower combined payment but both stay on your credit for 7 years

Answer 6

chapter 7 frees you of all debts,chapter 13 allows you to set up a payment plan

Answer 7

I thnk one of them is for personal bankruptcy, one is for Business or Corporate bankruptcy, Maybe Chapter 11 is when you go bankrupt and still agree to pay.

Answer 8

Chapter 7 is for private individuals; chapter 13 is for companies or corporations.

Answer 9

This is a great resource page for general information on bankruptcy...

http://www.creditmanagementworld.com/bankruptcy/bankruptcy01.html