The Difference Between Chapter 7 Bankruptcy and Chapter 13

May, 2014 by Alma Abell

Once you have decided to file bankruptcy the next step is figuring out whether you need to file Chapter 7 Bankruptcy and Chapter 13. If you are like most people you are probably scratching your head and wondering what the difference between the two are. Chapter 7 is actually considered to be the more desirable form of bankruptcy. It does not take nearly as long, it wipes you almost debt free, and you usually do not end up losing your assets.

What Is Chapter 7?

Chapter 7 Bankruptcy is a process that takes between three and six months to complete. Chapter 7 is going to wipe your entire credit history clean with the exception of any secured debts or things such as unpaid child support, mortgages, tax debts, or student loans.

What Is Chapter 13?

Chapter 13 bankruptcy is for individuals who have a lot of debt and do not qualify for Chapter 7. Usually you do not qualify for Chapter 7 because you make too much money. When the person making the decision takes the amount of money you make in a month and subtracts all of your allowed expenses including things such as rent, food, utility bills, and child support and decides you still have enough money left over that you could still pay your debt off they are going to rule that you do not qualify for Chapter 7. However, if you have a lot of debt you could file Chapter 13 bankruptcy and get put on a repayment plan. When you get put on a repayment plan you would not receive any more harassing phone calls for the next 3 to 5 years.

You should keep in mind that filing bankruptcy is not something you should make a habit of doing. While it wipes your record clean it is going to be on your record that you filed bankruptcy. Furthermore, you can only file bankruptcy once every 6 to 8 years. If you have decided that you have too much debt to sort through and pay off on your own, it might be time for you to reach out to a law firm such as Chris Carouthers & Associates, LLC for some help. Click here for more information.



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