Identify the Differences Between Chapter 7 and 13 Bankruptcy

Bankruptcy in SandySome companies and individuals have to go through the process of closing shop because of lack of profits, poor sales or just simply no brand recognition or if they suddenly lose their job. If ever that time comes, you might be choosing between filing for Chapter 7 or 13 bankruptcies. Identifying the differences between the two allows you find a way out while cutting your losses and determine the next step for your business or your next work.

Chapter 7

This form of bankruptcy wipes out an individual’s general unsecured debts like medical bills and credit cards. To qualify for this, a person must have little to no disposable source of income. When you take this course, a trustee administers your case. Other than reviewing bankruptcy documents and papers, the trustee’s work is to sell a non-exempt property to pay for debts incurred from their client’s creditors. If you don’t have any assets that are non-exempt, the creditors will get nothing.

This is the common route of low-income individuals that have little to no assets who want to rid themselves of unsecured debts. If you fit this description, seek the assistance of a bankruptcy attorney.

Chapter 13

This form of bankruptcy is for those who have a regular and ample source of income who have the ability to at least pay part of their debts with a repayment plan. If you make enough money, this may be the route you will take rather than Chapter 7.

When you file for Chapter 13 bankruptcy, you get to retain all your property, even non-exempt assets. In exchange for keeping the abovementioned, you have to pay all or a part of your debts. The amount you need will depend on income, expenses and the types of debt you have.

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These two are the options you have when you have to file for bankruptcy; knowing the difference allows you to weigh the pros and cons of your choice, and determines if you qualify for either one.