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Key Differences in Chapter 7 and Chapter 13 Bankruptcy

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Filing for bankruptcy gives individuals, families, and businesses who are unable to meet their financial burdens the opportunity to have some or all of their debts forgiven, thus giving them a fresh financial start. Of the many different types of bankruptcy proceedings available to debtors in the U.S., Chapters 7 and 13 are perhaps the most popular. Each comes with its own specific set of advantages and disadvantages, making it especially important for those who are considering filing for bankruptcy to first speak with an experienced bankruptcy attorney about their options. 

Chapter 7 Bankruptcy

There are actually a number of different types of bankruptcy for which a person can file. However, one of the most popular forms is known as Chapter 7 bankruptcy, which allows for the discharge of unsecured debt through the sale of non-exempt assets. Examples of unsecured debt include:

  • Credit card debt;
  • Debt incurred after taking out personal loans;
  • Student loan debt;
  • Court ordered child support payments; and
  • Medical bills. 

On the other hand, secured debts remain unaltered, which means that the collateral used to secure those debts will remain in the debtor’s possession as long as that individual makes timely payments. Chapter 7 bankruptcy proceedings are always available to businesses and individuals with business debt, although individuals without such debt are only permitted to file a Chapter 7 petition if their current monthly income is lower than the median income for a household of their size in the state. 

Chapter 13 Bankruptcy

Chapter 13 bankruptcy proceedings allow filers to discharge some of their debt and repay the rest over a three to five-year period. Unlike Chapter 7, Chapter 13 is only available to individuals and not businesses, although, in order to qualify, filers need to satisfy certain income and debt threshold requirements. This option tends to be especially attractive to those with significant incomes or valuable property, as these assets are protected, while any discretionary income is used to pay off creditors. 

Contact Our Office Today

Unfortunately, filing for bankruptcy is difficult and requires compliance with a series of complex procedural rules. Whether a person chooses to file for Chapter 7 or 13 bankruptcy, he or she should be represented and advised by an experienced attorney. 

To learn more about how we can help you during this difficult time, please call our office. A dedicated legal team member at Whitten & Whitten will help you schedule an initial case evaluation with an experienced Crown Point bankruptcy lawyer who can assist you. 


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