In bankruptcy, deciding to take action is often the first and most important step. The second step is to decide what type of bankruptcy is most suitable for your situation. Don’t worry; you don’t have to decide without consulting with an attorney first. Below are some of the differences between Chapter 7 and Chapter 13 bankruptcy to help differentiate between the two.
What type of bankruptcy?
- Chapter 7 - Liquidation (eliminates unsecured debt)
- Chapter 13 - Reorganization (develop plan for debt repayment)
Who can file Chapter 7 & Chapter 13?
- Chapter 7 - Individuals, businesses and organizations
- Chapter 13 - Only Individuals
How long does the bankruptcy process take?
- Chapter 7 - three to six months
- Chapter 13 - three to five years
Am I immediately protected from collections and wage garnishment?
- Chapter 7 - Yes
- Chapter 13 - Yes
Is my property protected?
- Chapter 7 - Trustee can sell the nonexempt property to pay debt
- Chapter 13 - Debtors keep all property. Must pay unsecured creditors an amount equal to the value of nonexempt assets.
How long will bankruptcy stay on my credit statement?
- Chapter 7 - up to 10 years
- Chapter 13 - up to 7 years
How often can I file for bankruptcy?
- Chapter 7 - once every eight years
- Chapter 13 - repeatedly, no time frame in-between filings
Can I keep my income after filing for bankruptcy?
- Chapter 7 - Income after bankruptcy is yours and is not garnished by creditors
- Chapter 13 - Income is subject to repayment plan and used to pay debts