top of page
  • Writer's pictureDaniel Rodriguez

Chapter 7 and Chapter 13 - the differences

Chapter 7 vs. Chapter 13 Chapter 7 involves liquidating assets to pay creditors. That means debts that are not exempt are sold to cover obligations. The remaining debt could be subject to discharge, meaning the debtor no longer has to pay the obligations. Not all debt is eligible for discharge, such as alimony and certain taxes. Would-be Chapter 7 filers must pass a means test that examines debts vs. income, among other factors. Those who cannot pass the means test could wait and file again or file for Chapter 13. Chapter 13 works differently since it involves proposing a payment plan to pay off a reduced amount of debt.

Chapter 13 obligations Debtors must submit a payment plan proposal when filing for Chapter 13 bankruptcy. The court could reject the proposal, but the debtor can submit another one. Creditors may make statements about the proposed plan, but the court makes all final decisions regarding approval. Some debt could be outright discharged in Chapter 13. Discharged debt would not be included in the payment plan. Persons approved for Chapter 13 bankruptcy must make their payments timely. Those unable to do so should inform the Chapter 13 trustee to avoid any problems, including the bankruptcy's dismissal.

0 views0 comments

Recent Posts

See All

Discharging Students Loans is Possible in a Bankruptcy

Student loan debt has become a massive burden for Americans, and it's only worsening. An estimated 44 million people in the United States carry student loan debt, with an average balance of over $35,0

The common signs a business might go bankrupt

Early indicators of potential bankruptcy High debt, low cash flow: When a business has a lot of debt and needs more money coming in, it can cause problems with creditors or tax debt. This can result i

What are adversary proceedings?

What situations call for adversary proceedings? According to FRBP 7001, the following circumstances could necessitate adversary proceedings: Recovering money or property Determining the priority, exte

bottom of page