What is the difference between Chapter 7 and Chapter 13 bankruptcy?
What is the difference between Chapter 7 and Chapter 13 bankruptcy? Min Austria Assistant at Ascent Law LLC 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, Ch...