CHAPTER 7 vs CHAPTER 13
Which is right for me?
Chapter 7 and Chapter 13 bankruptcy have different benefits for eliminating debt and are used for certain situations.
Which one you choose depends on your:
- Types of debt
Note: Chapter 11 is similar to Chapter 13 but for businesses owned and controlled by more than one person
|Chapter 7||Chapter 13|
|Summary||Debt Elimination||Debt Restructuring|
|Who files?||Individuals & Some businesses||Individuals & Sole Proprietor businesses|
|Yes - Immediately put a hold on |
most creditors collection activities
|Yes - (same)|
|My Assets||Best for those with few assets. |
May need to liquidate some assets.
|Keep your home, vehicle, etc|
Dealing with Debt
|Eliminate all unsecured debt |
(loans not backed by assets, like credit cards, medical bills, utilities, etc.)
|Adjusts debts for lower payments. Affordable payment plans with debts gone in 3-5yrs.|
|Income Needed||Best for those with low income||Best for those who can pay living expenses but not their current debts.
|How long does it take?||3-5 months, depending on your situation||3-5 year plan to pay off debts|
Who can file?
|Pass the means test. A formula to see if your income is low enough, or if you need to file chapter 13.||Must have enough income to meet your new obligations, minus certain expenses.|