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  • Carrie Williamson

Bankruptcy; Is Chapter 7 or Chapter 13 right for you?

Updated: Jul 17, 2019


Financial troubles are stressful and at times can be overwhelming. Searching for the debt relief solution that best suits your needs can be even more so. This post will discuss the difference between the two types of bankruptcy most commonly filed by individuals: Chapter 7 and Chapter 13.


Both types of bankruptcy offer the filer a chance to have a financial "fresh start." A Chapter 7 bankruptcy, also known as a "liquidation" case, wipes out your debts after an assigned trustee determines the value of of the equity in your assets and will liquidate and sell any assets that have non-exempt equity.  The proceeds from that sale of assets are then distributed to your creditors. Chapter 7 bankruptcy might be a good fit for someone who has large credit card debts and other unsecured bills, but little equity.


Chapter 13 is an option if you are behind on your home mortgage payments and you want to be able to keep your house at the end of the bankruptcy.  A Chapter 13 bankruptcy, also known as an "individual reorganization" case, allows you to catch up on past due mortgage payments over a period of time and reinstate the original mortgage agreement. A Chapter 13 may also be your option for you if you have too much income to file Chapter 7 bankruptcy or have certain taxes or other kinds of debt that are not dischargeable in bankruptcy.


Bankruptcy law is complex and it would be very difficult for a non-attorney to navigate all of the rules and requirements that must be followed to successfully complete a bankruptcy case. To discuss your options, including which type of bankruptcy filing is best for your individual situation, you should consult with an attorney in your area who specializes in bankruptcy filings.



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