The both, chapter 7 and Chapter 13, are consumer bankruptcy filing. The ultimate goal of both Chapter 7 and Chapter 13 bankruptcy is a discharge of debts and allow debtor a fresh start. In a Chapter 7 bankruptcy, a trustee can take the non exempt property, sell it and distribute the proceeds to your creditors so that they are repaid to the extent possible. Only those who pass the income "means test" can file Chapter 7 bankruptcy. Assuming you pass the means test and include all your debts in your paperwork, your debts are likely to be discharged within 4-6 months.
If you did not pass mean test that is you have income sufficient to make full timely payments to credtiors. Chapter 13 (sometimes called a "wage earner plan") allows an individual to pay his or her debts over an extended period. You must file a debt repayment plan with the bankruptcy court to repay all or a portion of your debts. Using a court-approved, supervised, and enforced payment plan. Chapter 13 bankruptcy filers help create their own payment plans, which give them three to five years to pay personal debt from their disposable incomes. You income is supervised and disposbale money is used to make full timely payments to credtiors. All creditors need be paid for the portion of funds available and unpaid amounts will be discharged (with some exceptions). Disposable income is whatever left after necessary expenses, like food and shelter, have been paid.
In a Chapter 13 bankruptcy, individuals are often allowed to keep their property.
The primary differences between a chapter 7 and a chapter 13 bankruptcy filing are as follows:
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The decision to file for bankruptcy involves many considerations that you might not be aware of until it's too late. BK Chapter Forum has a wealth of resources at your fingertips to get you started on your journey through bankruptcy. While it may seem difficult now, perhaps unbearable, bankruptcy can be a good thing.
Whether you file for Chapter 7 or Chapter 13, you’re well on your way toward getting out of debt and putting your best foot forward.
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DISCLAIMER: The above stated information should not be relied upon as legal authority nor should it be used as a substitute for reference to the U.S. Bankruptcy Code. Sole purpose of this website is debtor education towards bankruptcy. The information provided on this website may supplement, not substitute, for the advice of competent legal counsel. Please be advised to consult a bankruptcy attorney for legal advice. For additional information, please refer to the United States Bankruptcy Code (title 11, United States Code), the Federal Rules of Bankruptcy Procedure (Bankruptcy Rules), and the Local Rules for the respective States Bankruptcy Court.