The Basics: Chapter 7 vs. Chapter 13
What Is A Chapter 7 Bankruptcy?
Chapter 7 bankruptcies are a liquidation of debts. The bankruptcy court grants a discharge of your dischargeable debts after liquidating any non-exempt assets to pay creditors and upon successful completion of your chapter 7 bankruptcy. Only individuals are eligible to file a chapter 7 bankruptcy, not corporations or partnerships.
Life happens. Chapter 7 bankruptcies are a relatively short process and can truly offer the fresh start you and your family deserve and need in order to get back on your feet!
What Is A Chapter 13 Bankruptcy?
A chapter 13 bankruptcy is a repayment plan generally lasting 3-5 years. Debtors must have positive disposable income to file a chapter 13; however, a chapter 13 offers additional tools that can help families get back on their feet.
I no longer offer chapter 13 bankruptcy services but I am happy to refer you to someone in our area who does!
Dischargeable vs. Non-Dischargeable
Dischargeable:
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Credit Card Debt
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Medical Debt
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Money/Lawsuit Judgments against you
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Promissory notes or other personal obligations to pay secured debts
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Personal Loans (i.e. unsecured debts)
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Most debts arising from a car accident
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Debt is likely dischargeable if not explicitly non-dischargeable
Did you know?
Some debts that are non-dischargeable in a Chapter 7 are dischargeable in a Chapter 13!
Non-Dischargeable:
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Student Loans (generally)
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IRS Taxes and most tax debts
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Fines, Restitution, or Penalties for breaking the law
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Government Fines or Traffic Tickets
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Child Support / Spousal Maintenance
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Loans opened within 90 days of filing
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Debts arising from fraud, or willful or malicious acts
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Debts arising from embezzlement, larceny, or a breach of fiduciary duty
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Debts or creditors not included in your bankruptcy petition
Other Eligibility Factors
Chapter 7:
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Below current annual median income for your household size
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The purpose of bankruptcy is to obtain a discharge of debts not restructure them
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Current on secured loans you intend to retain
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Qualifying debts are primarily dischargeable
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May discharge amounts you are personally responsible for after a vehicle(s) is repossessed
Chapter 13:
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Mandatory if above current annual median income for your household size
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The purpose is to restructure a repayment of certain debts (e.g. Past due on mortgage or car loan; saving an asset from foreclosure or repossession)
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Some debts that are non-dischargeable in a chapter 7 may be dischargeable in a chapter 13
aboutME&
your experience
Life happens. Take control. Bankruptcy might be the smartest & quickest way for you to rebound and obtain a fresh start. But truth be told, it may not!
I promise transparency and compassion. I want to know your full situation and understand your goals so that you feel confident you're making an informed decision. This includes possible alternatives to bankruptcy. For example, if you’re facing foreclosure, or concerned about a single debt or other isolated circumstance, bankruptcy may be one of several options available to you.
Let’s grab a cup of coffee and chat. Hopefully just meeting and starting the process will relieve some stress.
It's important that you discuss the specifics of your situation with a qualified bankruptcy attorney.