Chapter 7 versus Chapter 13

What is the difference between Chapter 7 and Chapter 13? Either is a type of bankruptcy that may be filed by an individual or small business owner (sole proprietor). 

In Chapter 7, the debtor makes no payment of any kind nor is there a mechanism to pay any creditors. If qualified, Debtor is simply given a Chapter 7 discharge and has a fresh start. Learn more about discharge of federal student loans…

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, a debtor can repay back taxes (which otherwise could not be discharged in Chapter 7) over a 3 to 5 year period.

Schedule your telephone consultation with our office to determine which type of bankruptcy, Chapter 7 or Chapter 13, will be best for your financial situation.

Finally, there are different rules for discharge under each Chapter.  These laws are crucial if debtor has filed for bankruptcy previously. 

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 filing or 4 years from a previous Chapter 7 filing.

About Author

Keith F. Carr is an attorney practicing Divorce, Estate Planning, and Bankruptcy. Attorney Keith F. Carr has over 30 years experience. Founder of Law Offices of Keith F. Carr, located in San Francisco, San Jose, and Palo Alto, Ca.

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