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Chapter 7 Bankruptcy Vs. Chapter 13 Bankruptcy

Under the law, relief from debt can come either through liquidation or a debt repayment plan.

What Is Chapter 7 Bankruptcy?

Also known as “liquidation bankruptcy,” this allows a party to discharge all unsecured debts, including credit card bills, medical bills and even tax debts. If you are overwhelmed by unmanageable debts, you have the right to pursue relief. In all Chapter 7 bankruptcy cases, our firm will take a strategic, informed approach to identify your objectives and achieve optimal results in your case.

Should I File For Bankruptcy?

Many people are reluctant to file bankruptcy because of ongoing circulating myths and simple untruths about it. Remember that bankruptcy is a legal option available to all consumers and businesses that are suffering from debt. If you qualify for Chapter 7 bankruptcy, you can get a fresh start, eliminate debts, protect certain assets and move forward with the financial freedom you need. While many Chapter 7 bankruptcy cases can be concluded within 120 days, the law requires analysis of each individual case, both prior to filing and during the process of the case. Such analysis covers issues relating to assets, liabilities, various types of liabilities to determine whether they are nondischargeable, secured or unsecured, as well as analysis for what is commonly known as the “means test” in consumer debt cases. It is worth noting that not all Chapter 7 cases are consumer debt cases, and our firm is well versed in the distinction between nonconsumer (business debt) Chapter 7 practice and consumer debt Chapter 7 practice.

The following are the areas of Chapter 7 that our experienced bankruptcy attorneys handle:

  • Consumer versus nonconsumer case Chapter 7 analysis
  • “Means test” analysis
  • Exempt and nonexempt asset analysis
  • Reaffirmation agreements for secured debts
  • Chapter 7 motion practice, including relief from stay motions
  • Adversary proceedings and denial of discharge litigation
  • Corporate Chapter 7 filings
  • Discharge of tax liabilities in Chapter 7
  • Conversion motions from Chapter 13 to Chapter 7

What Is Chapter 13 Bankruptcy?

Unlike Chapter 7 Bankruptcy, Chapter 13 is for parties who have a higher income and have the prospect of repaying a portion of their debts over a period set by the court. This repayment of debt is known as a Chapter 13 plan. Chapter 13 cases are commonly known as “the wage earner” type of bankruptcy, in that they are best suited for people who do not qualify for Chapter 7 but do have a steady and consistent income. In order to propose a Chapter 13 plan, a party must first analyze and classify all their debts into different areas – priority – secured – and nonsecured, all of which have separate thresholds. Once this is done, a lump sum payment amount is reached that must ultimately be approved by the court. In certain cases, such payment plans are modified by either the Chapter 13 trustee, who administers the case or the court in an upward or downward direction. Like Chapter 7, the goal of Chapter 13 is to obtain a discharge of debt. Unlike Chapter 7, Chapter 13 takes much longer, usually five years, and only is concluded when the debtor has made all their payments.

Get Legal Advice On The Different Bankruptcy Types Today!

Because of the complexity of Chapter 13 cases, a party should obtain quality advice. The goal of our firm is to make sure that you are dealt with fairly and that you file a bankruptcy petition that fits your specific circumstances and not some preordained firm formula. Call us at 619-255-9551 or email us to request an in-person consultation as soon as possible.