Chapter 7 Bankruptcy and a Chapter 13 Bankruptcy

What is the difference between a Chapter 7 Bankruptcy and a Chapter 13 Bankruptcy?

A Chapter 7 Bankruptcy will get rid of all of your debts in one procedure. A Chapter 13 Bankruptcy will force your debts into a repayment plan. Why should you choose a Chapter 7 Bankruptcy or a Chapter 13 Bankruptcy? A Chapter 7 Bankruptcy is probably better if you qualify for it. The problem is that not everyone qualified for a Chapter 7 Bankruptcy.

In order to determine if you qualify for a Chapter 7 Bankruptcy the Court will look at your income (what you make) and your assets (what you own). If your income is unusually high then the Court may not allow you to file for a Chapter 7 Bankruptcy. In order to determine if your income is too high they will look at your household income for the prior six months. They will then compare that income to the average income for a family of your size. They will also take into account any special expenses you have, such as child support, medical expenses and school.

In determining if a Chapter 7 Bankruptcy or a Chapter 13 Bankruptcy is right for you, your Bankruptcy lawyer will also need to look at your assets. In a Chapter 7 Bankruptcy you can usually keep your house, cars and personal goods. However, there are limits to this. If you have a large amount of equity in your house (i.e. if you could sell it for a very large profit) or if you have very valuable personal goods, you may want to file a Chapter 13 Bankruptcy.

Under a Chapter 13 Bankruptcy your possessions are protected no matter how much they are worth. Even very expensive assets can be kept under a Chapter 13 Bankruptcy.

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