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Chapter 7 versus Chapter 13


What is the difference between Chapter 7 and Chapter 13? In Chapter 7, the debtor makes no payment of any kind nor is there a mechanism to pay creditors. If qualified, Debtor is simply given a Chapter 7 discharge and has a fresh start.

But what if the debtor is behind on mortgage payments , wishes to pay off his car, or owes back taxes which cannot be discharged in Chapter 7? Chapter 7 cannot help the debtor in this situation. Chapter 13 provides for repayment of debts over a three to five year period. It provides a way for debtors to repay missed mortgage payments or to pay for his or her car over a 3 to 5 year period. Likewise, debtor can repay back taxes (which otherwise could not be discharged in Chapter 7) over a 3 to 5 year period.

Finally, a debtor only obtain one Chapter 7 discharge ever 8 years. In Chapter 13, a debtor may obtain another Chapter 13 discharge every 2 years from a previous Chapter 13 or 4 years from a previous Chapter 7.