CHAPTER 7 vs CHAPTER 13 Bankruptcy

chapter 7 vs chapter 13

Which works best for me?

Chapter 7 and Chapter 13 bankruptcy each have different benefits and ways to eliminate debt. Which one you choose or qualify for depends on your:

  • Finances
  • Types of debt
  • Income

Note: Chapter 11 (business bankruptcy) is designed primarily for businesses owned and controlled by more than one person (Example: LLC, partnership, corporation). It is very similar to chapter 13 in restructuring debt. We currently do not handle chapter 11 cases, but if you are a single business owner (sole proprietorship), contact us to see if you qualify for chapter 13, which is less expensive than filing chapter 11. Call or fill out the form bellow.

Main Differences

 Chapter 7Chapter 13
ApproachDebt EliminationDebt Restructuring
SummaryCertain debts can be completely eliminated in 3-5 months. Quickest method.You still make payments to your lenders, but at a much lower and manageable payment schedule that keeps you or your business operating.
Who files?Individuals & Some businessesIndividuals & Sole Proprietor businesses
Creditors
Staying actions
Yes - Immediately put a hold on
most creditors collection activities
Yes - (same)
My AssetsBest for those with few assets.
May need to liquidate some assets.
Keep your home, vehicle, etc
My Bills
Dealing with Debt
Eliminate all unsecured debt
(loans not backed by assets, like credit cards, medical bills, utilities, etc.)
Adjusts debts for lower payments. Affordable payment plans with debts gone in 3-5yrs.
Income NeededBest for those with low incomeBest for those who can pay living expenses but not their current debts.
How long does it take?3-5 months, depending on your situation3-5 year plan to pay off debts
Qualification
Who can file?
Pass the means test. A formula to see if your income is low enough, or if you need to file chapter 13.Must have enough income to meet your new obligations, minus certain expenses.

Need more advice on your specific situation?

Attorney Steven Holland

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