Chapter 7
A Chapter 7 bankruptcy, also known as a straight bankruptcy, allows you to eliminate most of your unsecured debt (credit cards, personal loans, lines of credit, delinquent utility bills etc.) without having to pay anything toward them. A Chapter 7 can also help eliminate mortgage debt or a vehicle loan if you decide to give up the house or car. This type of bankruptcy cannot eliminate student loans, some tax debt, criminal restitution, mortgage debt or vehicle loans (if you intend to keep your house and car). A Chapter 7 case normally lasts four to six months from the date that the case is filed to when the case is closed.
In order to qualify for a Chapter 7 bankruptcy, you must fall within certain income limitations. For most people, the Bankruptcy Court allows you to keep all of your property. If there is any chance you would lose your property, we would discuss this before making the decision to file bankruptcy papers.
Chapter 13
A Chapter 13 is a repayment plan that lasts between three and five years. This type of bankruptcy gives you the opportunity to restructure your debt and pay back what you can afford on debts like personal loans, credit cards and medical bills.
A Chapter 13 bankruptcy can also help you catch up on delinquent mortgage payments, car payments or taxes. It can even stop a sheriff’s sale, repossession or tax sale. A Chapter 13 allows you to keep more assets than a Chapter 7, since you will be paying something back to your creditors.