What’s the difference between Chapter 7 and Chapter 13 Bankruptcy?

Chapter 7 is known as a liquidation.  That’s not as bad as it sounds.  Most people who file Chapter 7 do not have to give up any property.  You do, however, have to disclose all of your assets and all of your debts.  You have to file and income and expense statement.  Chapter 7 is most appropriate for people who have large amounts of unsecured debt, such as credit card debt or medical expenses.   You do not have to make payments in Chapter 7.  At the conclusion of the Chapter 7 Bankruptcy, usually about 120 days after you file, you receive a discharge of your debts, which means that most of your debts are forgiven.

On the other hand, Chapter 13 is known as a wage earner’s plan.  In Chapter 13, the Debtor pays a portion of his income to the Chapter 13 Trustee to distribute among his or her creditors.  The Chapter 13 Plan can last up to 5 years.  At the end of the Chapter 13 Plan, the debtor also receives a discharge.  Chapter 13 is appropriate for persons who have a regular income and want to catch up on past due mortgage payments or car payments.  Some individuals with higher incomes who need bankruptcy protection cannot file Chapter 7 and need to file under Chapter 13.

Please call me at 501-604-4525 or e-mail me at srd@stevenrdavislaw.com if you have questions about which Chapter is right for you.


About Administrator

I am Steven R. Davis. I have practiced law in the Little Rock area for more than 30 years. My areas of practice include bankruptcy, Social Security Disability and SSI, criminal defense, divorce, custody, and visitation, and wills, trust and probate. I offer prompt, personal service at a reasonable price.
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