The difference between Chapter 7 and Chapter 13 bankruptcy
When it comes to understanding the difference between Chapter 7 bankruptcy and Chapter 13 bankruptcy, it's not always clear which form of bankruptcy will allow you to keep the most amount of your assets. In this article we will explore some of the difference in bankruptcy laws regarding Chapter 7 and bankruptcy chapter 13.
Chapter 7 bankruptcy:
When you file for bankruptcy under Chapter 7 the court will reduce many of the debts that you might owe to creditors. You essentially walk away without your debts; but depending on how much you owe it's possible that the Chapter 7 bankruptcy trustee might see some of your assets or property as part of the collection to reduce your debt to creditors. This means that certain non-exempt property/assets could be sold in order to pay off some of the credit debt that you owe. Fortunately, Florida has some very generous property exemptions. As an experienced bankruptcy attorney, I am happy to discuss your particular situation with you.
Chapter 13 bankruptcy:
When you file for Chapter 13 bankruptcy you don't have to worry about losing some or all of your assets, like your home or your personal property. Unlike Chapter 7 bankruptcy, Chapter 13 bankruptcy is designed as a repayment plan. In other words, you can reorganize your debts and pay back a percentage of your debts over a period of either 36 or 60 months. The percentage of debts you must repay under your Chapter 13 repayment plan is determined, generally, based on your income. This means that you may be eligible to keep your property and assets. You are also free to surrender certain property that you no longer want, such as a home that is upside down/underwater or a car that is not worth paying on any longer. Chapter 13 bankruptcy simply establishes a repayment plan that will allow you to pay back your creditors over time while reducing your debt.
It's important to note that neither chapter 7 bankruptcy or Chapter 13 bankruptcy should not be taken lightly. Speaking to an experience bankruptcy lawyer is a good idea. Understanding the difference between these two types of US bankruptcy could help to save your assets during these trying times.