Chapter 7 is a quick bankruptcy. It wipes out your general debts without payment. These debts include credit card bills, medical bills, and payday loans. Chapter 13 bankruptcy is often referred to as reorganization bankruptcy. It deals with debtors with regular income who need additional time to pay back their debt.
Chapter 7 and 13 bankruptcies are different in how they deal with the property you own. In Chapter 7, your personal property may be sold by a bankruptcy trustee in order to pay back creditors. In chapter 13 bankruptcy, you can keep your property as long as you pay back creditors what they would have received if sold.
The time to discharge also varies between the two chapters. Chapter 7 bankruptcy requires 3 to 4 months before a discharge. Chapter 13, usually takes 3 to 5 years, depending on the length of the plan.
The benefits of Chapter 7 bankruptcy are that it is a fairly quick process which allows debtors to quickly discharge their eligible debts. The benefits of Chapter 13 are that debtors are allowed to keep property and assets while catching up on missed payments such as mortgage, car, and tax debt payments.
Chapter 7 and Chapter 13 also have different requirements. Chapter 7 debtors must meet income requirements. Also, you cannot file Chapter 13 bankruptcy if your debt is too high. In that situation, you may be forced to file Chapter 11 bankruptcy. For a review of your situation, contact the bankruptcy attorneys at De Novo Law Firm a (951) 801-5570.