Dan A. Ribble- LLC 2818310
Dan A. Ribble- LLC 2818310

_What Is the Difference Between Chapter 7 and Chapter 13?

_Chapters 7 and 13 of the United States Bankruptcy Code have a few things in common:
  • Both chapters are intended primarily for individual debtors.
  • Both chapters create an automatic stay once filed, meaning that your creditors may no longer harass you and any lawsuits they have brought against you are put on hold.
  • Both chapters require financial counseling before filing for bankruptcy and after completing discharge or a repayment plan.
  • Both chapters ultimately lead to the discharge, or clearing, of most debts.
But the differences between the two chapters demand the most attention from debtors trying to decide whether to file bankruptcy and which chapter to use.

Differences between Chapter 13 and Chapter 7
  • Liquidation v. debt relief: Chapter 7 bankruptcy is also known as liquidation bankruptcy, because all of your non-exempt assets are sold—liquidated—to pay off your creditors.  Under Chapter 13, you can keep all of your assets, and the bankruptcy creates a three- to five-year interest-free window in which you use your income to pay off your creditors.
  • A few months v. a few years: Chapter 7 bankruptcies tend to lead fairly quickly to discharge.  Once you and your Chapter 7 bankruptcy lawyer in Albuquerque file with the court, you should receive a discharge in six months or less, even if the case remains open as the trustee sells your remaining assets.  You will also have to present proof of completion of a financial management education program in order to receive your discharge.
 

Chapter 13 bankruptcies start quickly, but then take three or five years to complete.  You and your Chapter 13 attorney in Albuquerque must submit a repayment plan when you file Chapter 13 bankruptcy or within 15 days thereof, and you must make your first payments within 45 days of approval of your repayment plan.

Over the next three to five years—how long depends largely on your income—you must make regular payments, as delineated by your repayment plan, either to a trustee who disburses the money to your creditors or directly to the creditors themselves.  Once you have repaid as much of your debt as you could in the time allotted, you receive a discharge of outstanding debts.

Facing bankruptcy in New Mexico?  Work with an expert Albuquerque bankruptcy attorney

Dan A. Ribble, LLC brings almost four decades of experience counseling debtors to every case.  If you feel that bankruptcy has become unavoidable, contact Dan today to set up a free initial consultation.  He will help you understand the advantages and disadvantages of Chapter 7 versus Chapter 13 bankruptcy, avoid bankruptcy if possible and advisable, and guide you through the complex process if you choose to declare bankruptcy.

Practice Areas

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Our Office

__3500 Comanche NE
Building B
Albuquerque, NM 87107

Phone:  505.884.0770
Fax:       505.881.7003

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