Chapter 7 and Chapter 13 Bankruptcy
Guiding You Through the Process
Bankruptcy laws are complex and confusing. At EnrollAid, we will help you through the process of filing either Chapter 7 and 13 bankruptcy, and make the process easier for you to understand.
Once you’ve decided that bankruptcy is the right solution for your financial situation, you will need to decide which type of bankruptcy is most beneficial. If you are an individual or a small business owner, then your most obvious choices are Chapter 7 “liquidation” bankruptcy or Chapter 13 “wage earners” or “reorganization” bankruptcy.
What Are the Differences Between Chapter 7 and Chapter 13 Bankruptcy?
Chapter 7 Bankruptcy
Basics
A Chapter 7 bankruptcy will discharge most types of unsecured debt. The trustee will try to sell any significant nonexempt property in order to repay your creditors.
Time Frame
A typical Chapter 7 bankruptcy case takes three to four months to complete.
Property
Many Chapter 7 debtors keep all or most of their property. Petitioners with significant equity or assets that are not exempt by law could lose them to satisfy some debts.
Your Income
Some high-income earners won’t be eligible for Chapter 7.
Homeowners/Foreclosures
Chapter 7 can temporarily stop foreclosure, but unless you can get current on your mortgage, the foreclosure will eventually continue.
Eligibility
Chapter 7 is available to those whose income is less than the median of their state, or those who can pass the means test.
Filing Complexity
Filing for Chapter 7 involves preparing a large set of forms and navigating some tricky legal issues, but simple cases can be done pro se – that is, without hiring an attorney.
Chapter 13 Bankruptcy
Basics
In Chapter 13 bankruptcy, you repay your creditors (some in full, some in part) through a Chapter 13 repayment plan.
Time Frame
The Chapter 13 payment plan lasts three or five years (depending on your income). At the end, many of your unsecured debts will be discharged.
Property
No property is liquidated under a Chapter 13 bankruptcy.
Your Income
Chapter 13 requires a regular income for the monthly payment.
Homeowners/Foreclosures
Chapter 13 can stop a foreclosure and you can make up past due mortgage payments through your repayment plan.
Eligibility
Chapter 13 has no income requirement, but unsecured debt must be below $394,725 and secured debt below $1,184,200 (as of April 2016).
Filing Complexity
Chapter 13 bankruptcy involves submitting a repayment plan to the court, and will almost always require hiring an attorney to complete successfully.
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