Should I File A Chapter 7 Or A Chapter 13 Bankruptcy?
By Douglas Jacobs, California Bankruptcy Attorney on Aug 5, 2007 in General Bankruptcy Information
Chapter 7 and 13 are the two most common types of bankruptcies filed by non-businesses. They are very different in the way they work, and there are advantages and disadvantages to both.
A Chapter 7 is often called a straight bankruptcy since it discharges all dischargeable debts. It’s a one-shot deal usually, and after four to six months, it’s over: all of your credit card debt and medical bills are gone, most of your property is intact and you get your fresh start.
A Chapter 13, on the other hand is a reorganization of debt. It is a payment plan whereby you make monthly payments to a bankruptcy trustee who distributes the money to your creditors. It lasts for three or five years depending on your circumstances, and, for the most part, after the payments are made, the rest of your unsecured debt goes away.
Under BAPCPA, the new bankruptcy law, there are circumstances where you can’t file a Chapter 7 even if you want too. These are mostly based on your income and your monthly expenses. Those factors will also determine whether your plan, in a Chapter 13 bankruptcy, will be for three or five years.
If you are thinking about filing, see a competent bankruptcy attorney who can help you decide which Chapter is right for you.
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