Date post: | 24-May-2015 |
Category: |
Law |
Upload: | ronald-weiss |
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WHAT IS THE DIFFERENCE BETWEEN CHAPTER 7 AND
CHAPTER 13?A Guide for Consumers Filing for Bankruptcy Protection
Chapter 7 and Chapter 13
Chapter 7 and Chapter 13 bankruptcy are the most
common types of bankruptcy that consumers file
Both can provide relief from your debts
When you file for Chapter 7 or Chapter 13, collections
activities against you must stop immediately
There are important differences between Chapter 7
and Chapter 13
Chapter 7 Bankruptcy
Chapter 7 is a liquidation bankruptcy
Non-exempt assets are sold in order to pay creditors back money that is
owed
After creditors are repaid from the sale of assets & available
funds, eligible debts are discharged
You do not have to pay them back
Chapter 7 is Means Tested
To file for Chapter 7 bankruptcy protection, you
must make less than the median income in your state for families with
your household size
If you make more than the median, you cannot file
Chapter 7 unless you pass a means test showing you don’t have disposal income
to pay towards your debts
Chapter 13
Chapter 13 is different from Chapter 7 because it does not
require the sale of assets
You can keep all of your possessions in Chapter 13
Chapter 13 requires the creation of a repayment plan
that creditors approve
You must pay back a portion of your debts over 3-5 years
At the end of the payment plan,
the remaining debt balance is discharged
Chapter 13 is Wage Earner’s Bankruptcy
You are not required to pass a means test in order to file for
Chapter 13 bankruptcy
People with an income that is too high for a Chapter 7 filing can get relief from their debts
by filing a Chapter 13
Learn More About Bankruptcy in Long Island