Bankruptcy – Chapter 7 or Chapter 13?

Question: What is the difference between Chapter 7 and Chapter 13 bankruptcy?

The United States Congress created bankruptcy for your protection. It’s available to all the honest, hard-working people living in America. The benefit? Either form of bankruptcy grants immediate protection against creditors. All collection activity is immediately stopped.

Chapter 7 bankruptcy is what most people call ‘the liquidation”. Most hard-working Chapter 7 filers have average income, but little or no money is left after trying to pay their regular monthly expenses. These families have very little equity in their home and other assets. And they often do have a home, cars, furniture, retirement savings, and even own businesses.

Chapter 7 brings a good result. In most cases, all assets are completely protected. That’s right, even the home … and the business. And most unsecured debts can be completely eliminated. The family is allowed a new chance. You get … a fresh start.

Question: So what about Chapter 13?

Chapter 13 is a little different. Maybe you have significant equity in your home or other property — and you want to keep it. You have regular income and can pay your living expenses, but you can’t keep up with some of the monthly payments.

Chapter 13 is what some call “a re-organization”. I see it more like a refinance of your past due amounts. You can keep most of your property. Even better, you get to spread out your catch-up payments for those past due accounts over the next 3 to 5 years. You make one monthly “chapter 13 plan payment”, based on your ability to pay. And you and your co-signers can still be protected from creditor harassment. And that gives back your peace of mind.

Chapter 7 or Chapter 13. Either way, know this. This protection was created for all of us.

We are U.S. Law Attorneys. Get your life back.