What is the difference between Chapter 7 and Chapter 13 bankruptcy?
What is the difference between Chapter 7 and Chapter 13 bankruptcy?
A major difference between Chapter 7 and Chapter 13 bankruptcy is the way that debts are discharged. Chapter 7 bankruptcy is a liquidation bankruptcy where nonexempt property is handed over to a trustee who will sell it and distribute the proceeds to your creditors. After liquidation, you owe nothing to creditors. In some cases, you may be able to keep some of your assets. The list of exempt assets varies from state to state, but most Chapter 7 filers have assets that are exempt from liquidation. However, if you have no assets, there is no way to repay your creditors.
Although both bankruptcy methods have their pros and cons, Chapter 7 is the more popular option. It is quicker and easier than Chapter 13 and is generally preferred by consumers. Most filers will qualify for Chapter 7 bankruptcy after a means test, which identifies their income and expenses. Among other benefits, Chapter 7 bankruptcy allows you to eliminate most of your debts, including credit cards and student loans. Chapter 13 bankruptcy is more complicated, but it can also give you more flexibility with your non-exempt assets.
Another benefit of filing for Chapter 13 bankruptcy is that you can keep your home and avoid foreclosure. Another advantage is that you have more time to pay back your debts. Additionally, a Chapter 13 bankruptcy plan protects third parties, including your co-signers. You can also assign debts to different creditor classes and payment percentages. And once you complete your repayments, your debts will be discharged.
If you have any questions or in need a Bankruptcy Attorney, we have the Best Attorneys in Utah. Please call this law firm for free consultation.
Ascent Law LLC
8833 S Redwood Road Suite C
West Jordan UT 84088
(801) 676-5506
