Comparing Chapter 7 And Chapter 13 Bankruptcy

Grand Law Firm

When someone files for bankruptcy, they will have their choice of a number of different chapters. The two most common forms of personal bankruptcy, though, are Chapter 7 and Chapter 13 bankruptcy. These two types of bankruptcy dominate the landscape, and they compose most personal bankruptcy filings in the United States.

But what are the differences between these two filings? For Chapter 7, this type of bankruptcy is known for its liquidation and debt discharge process. This will lead to the loss of some of your assets, but in doing so your creditors will be paid back (not necessarily in full) and many of your debts will be wiped away.

For Chapter 13, the bankruptcy process is much different. Instead of liquidation, Chapter 13 allows you to protect a lot of your assets, while also allowing you to reorganize your debt under a new payment plan. The rules pertaining to you new payment plan will be strict and you shouldn't miss a payment after you have reorganized. But this form of bankruptcy can be very beneficial for people with valuable assets, like a home or car.

There are many other legal intricacies that come with bankruptcy in general, as well as specifically with Chapter 7 and Chapter 13. As an example, if you file Chapter 13, you can re-file for bankruptcy later. Whereas Chapter 7 prevents that from happening. In the end, you shouldn't go through a bankruptcy without experienced legal counsel.

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