Differences Between Chapter 7 and Chapter 13 Bankruptcy

If you feel backed into a corner by mounting debt, bankruptcy may be the answer. Bankruptcy is a legal proceeding that helps consumers discharge unsecured debt. Though not for everyone, bankruptcy can be an effective mechanism for those seeking to wipe the slate clean and get a fresh start. An experienced Bronx bankruptcy attorney can review your debt and finances and determine if Chapter 7 or Chapter 13 is best for your situation.

What is Chapter 7 bankruptcy?

Chapter 7, sometimes called “liquidation” bankruptcy, is the most widely used type of debt elimination. If you have debt building up and can’t pay creditors back, we can help you file for Chapter 7 bankruptcy. Your first step is to gather the necessary forms. Our lawyers can ensure you provide accurate and clear information regarding your financial situation. Thirty days from your filing date, we can attend the creditors meeting with you.

Some of the benefits of filing for Chapter 7 bankruptcy include:

  • Fast: Debt relief under Chapter 7, from start to finish, takes approximately 3-6 months.
  • Exemptions: State exemptions are liberal and allow consumers to keep the homestead (up to a certain amount based on county), along with personal property, wages, tools of trade, public benefits, and other items.
  • Eliminates debt: Unlike Chapter 13, Chapter 7 discharges all unsecured debts without need for repayment. This includes credit cards, medical bills, civil court judgements, utility bills, and car accidents claims.
  • Automatic stay: As soon as you file for bankruptcy, an automatic stay goes into effect, halting collection efforts and creditor harassment.

Quick and affordable, Chapter 7 can discharge your debt and help you rebuild your life. A lawyer can simplify the process and help you sidestep legal pitfalls along the way.

How Chapter 13 differs from Chapter 7

Depending on your circumstances, Chapter 13 bankruptcy may be the better debt elimination method. Under this model, you don’t need to liquidate any assets to pay back creditors. Instead, you devise a repayment plan and agree to pay off your debt over the course of 3-5 years. If you have a steady paycheck, but just can’t seem to chip away at your debt, Chapter 13 may be your best option. If you earn too much money, you may be exempt from filing for Chapter 7, and Chapter 13 may be your only option.

Navigating bankruptcy law can be tricky, especially when creditors are causing you anxiety and stress. Our Bronx bankruptcy lawyers can assess your case, protect your interests, and help you live debt free.

Thomas M. Denaro
About the Author: Thomas Denaro
Thomas M. Denaro is an experienced bankruptcy attorney serving the Bronx and surrounding areas. He represents Bronx families in bankruptcy court, and has handled thousands of Chapter 7 and Chapter 13 cases from beginning to end.