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  • Writer's pictureMichellePattersonLaw

What is the Difference Between a Chapter 7 and a Chapter 13 Bankruptcy?

As an individual (as opposed to a business), there are two common chapters available to you when filing for bankruptcy—Chapter 7 and Chapter 13. The decision to file either a Chapter 7 or 13 depends on your income, your property interests, and the amount of debt you have.

The Chapter 7 is the most popular chapter, and is the quickest process (about 3 months) towards getting your financial fresh start. The goal of a Chapter 7 is to receive an order of discharge from the bankruptcy court that relieves you from your responsibility for paying your pre-bankruptcy debts that qualify for a discharge. The process of a Chapter 7 involves a trustee who is assigned to your case to determine the value of your estate (yes, you have an estate), so he or she may liquidate your property (not including exempt property) and pay your creditors with the proceeds. If you are considering filing for a Chapter 7 bankruptcy, you should consult with a bankruptcy attorney to see if you qualify, and how your debts and property interests will be treated in your case.

A Chapter 13 bankruptcy has the same goal of receiving the order of discharge, but is more time consuming than the Chapter 7. A Chapter 13 case involves paying into a 3 to 5 year payment plan, in which your net monthly income (income after expenses) is paid to a Chapter 13 trustee every month. The trustee, in turn, pays your creditors based on priority. Like a Chapter 7 bankruptcy, not every debtor qualifies for a Chapter 13. But a Chapter 13 bankruptcy is ideal for someone who has property they would like to keep, or for someone with debts that are not dischargeable.

If you are considering bankruptcy, but are not sure which chapter is right for you, contact this office to schedule a consultation.

Michelle Patterson Law

p: (619) 630-5282


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