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Bankruptcy isn’t right for everyone. Our attorneys can tell you if filing bankruptcy is a smart choice for you and help you decide which method of bankruptcy is best suited for your financial situation. Chapter 7 bankruptcy is a great way to get out of debt and start afresh, and the quickest bankruptcy method. However, not every one qualifies for Chapter 7 bankruptcy and not every type of debt is eligible. In some cases, Chapter 13 is the best option.


Chapter 7  |  Chapter 13

Chapter 7 Bankruptcy

A Chapter 7 Bankruptcy is a powerful remedy for those who are eligible. It is an opportunity to emerge out of financial crisis and start afresh. It is almost always quicker than Chapter 13.

The goal of filing Chapter 7 is to obtain a discharge. A discharge is the court order that cancels your personal liability for debts you incur before your bankruptcy case is filed. In exchange for a discharge, some of your property may be sold for the benefit of your creditors. However, the vast majority of Chapter 7 cases are called “no asset” cases because most debtors are able to protect all of their assets from liquidation.

Some debts like child support, most taxes, and most student loans cannot be cancelled in bankruptcy. Your bankruptcy attorney will tell you whether a particular debt can be discharged in bankruptcy.

You may not be eligible for Chapter 7 if you have previously filed Chapter 7 or if your income is too high. Your Chapter 7 Bankruptcy attorney will help you determine this and will also prepare all the lists, schedules, and statements that must be filed with your bankruptcy petition.

Chapter 13 Bankruptcy

When someone files Chapter 13 bankruptcy, their goal is to have the opportunity to repay some or all of the debts. This is different from a Chapter 7 case in which all or some of the debtor’s assets are sold and proceeds distributed to his or her creditors. Instead, Chapter 13 allows the debtor to use future income to pay off the creditors.

Chapter 13 Bankruptcy is designed for people with regular income to fund a court supervised repayment plan. The United States Bankruptcy Code gives the debtor a maximum time span of 5 years to pay off his or her debts. Debtors are allowed to keep all of their property so long as the debtor complies with his or her Court approved plan. The written plan is created in consultation with the debtor’s attorney. It can be approved by the Court even if certain creditors disagree with it. The plan says how much money, if any, each creditor will receive in repayment. Your attorney’s goal is to prepare a repayment plan that complies with the law and best works for your specific goals and needs.

The Chapter 13 Trustee is an appointed, private attorney who administers the debtor’s plan receiving, holding and accounting for the debtor’s plan payments, and by paying allowed creditors’ claims with those funds.

According to the law, all parties, including creditors, must comply with the repayment plan. Creditors can’t collect money from the debtor personally. The primary advantage of Chapter 13 over Chapter 7 Bankruptcy is the debtor is not forced to liquidate his or her property. Once a debtor completes all plan payments, he or she is given a full plan discharge, just like in Chapter 7.