_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.
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.
the differences between the two chapters demand the most attention from
debtors trying to decide whether to file bankruptcy and which chapter
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
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
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 todayto 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