Understanding The Differences Between Chapter 7 And Chapter 13 Bankruptcy

Facing bankruptcy can seem daunting at first, with the stressful financial situation a person is likely facing in addition to the number of choices he or she has regarding bankruptcy. But filing for bankruptcy can be a great financial relief, as a person has taken the first step toward regaining financial freedom from his or her debts. Once you have decided that bankruptcy is right for you, the decision on which form of bankruptcy suits your situation comes next. Many debtors settle on Chapter 13 bankruptcy as their solution. Similar to Chapter 7 bankruptcy, Chapter 13 can be filed by both individuals and businesses, making it one of the more popularly accessed forms of bankruptcy. However, there are important differences between Chapter 7 and Chapter 13, and if you are thinking of filing for Chapter 13, it’s important that you recognize those differences.

Important Distinctions

Chapter 13 bankruptcy is often filed by individuals who don’t qualify for Chapter 7 bankruptcy. While the two seem very similar at times, there are key distinctions between them that many people are unaware of. For instance, some of these differences include:

  • Asset liquidation in Chapter 7 vs. Asset retention in Chapter 13
  • Construction of repayment plans in Chapter 13
  • Application of the means test in Chapter 7
  • Different eligibility requirements for Chapter 7 and Chapter 13

These differences matter greatly when a person is deciding on which form of bankruptcy to file.

Get Legal Assistance

If you or someone you love has been facing financial distress for a while and think that there is no way out of debt, bankruptcy may be the answer. If you want legal assistance or advice regarding the bankruptcy process as it pertains to your particular circumstances, contact an experienced bankruptcy lawyer today to discuss your position.

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