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Three Differences Between Chapter 7 and Chapter 13 Bankruptcy

If you are experiencing difficulty paying all of your monthly bills, you might be thinking about filing for bankruptcy. And, if you are thinking about filing for bankruptcy you probably have a lot of questions about the process. There are two main types of consumer bankruptcies, and either one will give you the relief you need. That said, there are some major differences between the types of bankruptcies available to consumer debtors, and knowing the differences can help you decide what is best for you.

Three main differences between a Chapter 7 bankruptcy and case filed under Chapter 13 are:

● A Chapter 7 case will allow you to eliminate all of your unsecured debt. This means all of those high interest rate credit cards, signature loans, and medical debts will no longer be due. But in Chapter 13, you are required to pay back at least a small portion of your unsecured debt. The amount that you have to pay back depends on your income, and your total secured debt, and it varies from person to person.
● A Chapter 7 case usually takes no longer than 6 months to complete, and most times it is much faster. But a Chapter 13 can last for up to five years, and that is because in a Chapter 13 you come up with a repayment plan for all of your debts. Once you get a repayment plan that is acceptable to your creditors and to the Court, you will make one monthly payment to the Chapter 13 Trustee, and he will disburse payments to your creditors.
● In a Chapter 13 case you are allowed to pay back only what your car is worth, instead of what you owe. But in a Chapter 7 if you want to keep your car you will probably have to pay the full balance. You are also allowed to repay your back due mortgage payments over a several month period if you file a Chapter 13, but if you file a Chapter 7 case most mortgage lenders will want the full reinstatement figure up front.

There are advantages and disadvantages to each type of case, and you have to do what works best for you. You also have to file the type of case that the law allows you to file, and to find this out you will need the help of a qualified bankruptcy attorney. Contact our office for more information.

For more information about bankruptcy, contact us at We will help by coming up with solutions that work for you.

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