Bankruptcy 7 vs 13
 

Liquidation Chapter 7 vs 13

Chapter 7 is a bankruptcy discharge that involves liquidation of all the non-exempt properties of the debtor. The debtor is assisted in this liquidation process by a bankruptcy trustee who helps in the distribution of the money to all the creditors.

On the other hand, bankruptcy Chapter 13 allows the debtor to spread the payments to creditors over a period of three to five years. You have to prove that you have a steady income that can allow you to make this payment before you can file Chapter 13.

When comparing Bankruptcy 7 vs 13, one of the most notable differences is that in Chapter 7, the debtor wants to liquidate their non-exempt property but in Chapter 13,the debtor chooses to hold on to their non-exempt property.

Bankruptcy And Personal Assets

When comparing Bankruptcy 7 vs 13, you need to consider how much you have and what will not hurt you and your family financially when you let it go.

If you have very little property, then you can discharge your debt using Chapter 7; but if you have a lot of valuable property, you may choose to hold onto your property and use Chapter 13.

Financial Stability

You financial stability is another determinant factor in Bankruptcy 7 vs 13. If you are surviving from paycheck to paycheck, Chapter 13 will just strain you financially because you need to have a steady income to allow these deductions.

In Bankruptcy 7 vs 13, Chapter 7 has an advantage over Chapter 13 in that debtors can completely settle their debts unlike in Chapter 13 where the debtor will have the debt for as long as they are still making the payments.

Discharge Process

Another advantage that Chapter 7 has over Chapter 13 is that, with 7, the process is faster. You can successfully discharge your bankruptcy in a very short period of time and during this process, creditors can no longer contact.

When focusing on Bankruptcy 7 vs 13, the advantages of Chapter 13 include:

• getting to keep your property
• and spreading your payments over a period of time that will allow you to make them comfortably 
• you only have to make monthly payments
• during this time, like in Chapter 7, creditors can’t get in touch with you.

Bankruptcy Eligibility

No matter how convenient a chapter may be for you, when focusing on Bankruptcy 7 vs 13, you need to find out whether you are eligible for either.

In filing for Chapter 7, debtors have to go through a ‘means test’ and pass it to be eligible, after which, with the help of a credit counselor, the debtor has to complete a pre-filing session.

However, in the case of Chapter 13, any debtor who has an unsecured debt of less than $370,000 can be eligible to discharge his/her bankruptcy using this method.

You can also discharge your secured debts of less than $1,200,000 using Chapter 13. However, in Chapter 13, you have to prove that you have a steady income that can allow you to make regular monthly payments.

You also need to show commitment to making the payments by proving that you are actually paying the maximum amount of money that you can afford to spare per month.

If you are financially stable, Chapter 13 is more advisable than Chapter 7.