What is the Difference Between Chapter 7 and 13?

Chapter 7
Chapter 7 is a much faster option. The goal will be to discharge all your unsecured debt such as credit cards and personal loans that are not tied to your property (like payday loans). The exception to this rule might be taxes you owe for the last 3 years (bit more complicated so talk to your attorney) and student loans. If you want to surrender a car or house because you can't afford it, you would discharge any balance you owe after the creditor sells the property.

People in Chapter 7 bankruptcy cannot afford to pay their unsecured creditors any money.  Often they are under the average income for their state.  

You cannot file a Chapter 7 case if you are behind on your child support/ maintenance payments.

You cannot file Chapter 7 if you are behind on your car or house AND want to keep the property.



It is super important for you to file your bankruptcy case BEFORE there is a Judgment in a lawsuit.  Under some circumstances, they can be set aside.
Once you have a Judgment against you, the creditor can garnish your wages and/or bank account.
If you own a house, the Judgment attaches and must be paid before you can sell the property.
Getting phone calls from collectors can go beyond annoying... 
it may start impacting your 
physical health...  causing anxiety and/or depression.   
Not all collectors play by the rules.  Often they tell you things that are not true.  
Hiring an attorney is the first step to stopping harassing collectors.
Chapter 13

Chapter 13 Bankruptcy is a great option if you are behind on a car or house loan and you need time to help catch up the payments. This could be helpful with owing a large amount of taxes as well. You may have to file Chapter 13 Bankruptcy if you owe child support or maintenance and are behind on payments. Many of my clients filed Chapter 13 as they earn a bit too much money and do have some funds they could pay to creditors. There is no set amount of a Chapter 13 Plan Payment and you will need to discuss your situation with an attorney to know what your payment would be. This can be flexible and change over time if your situation changes.

Chapter 13 is also great for people who have some money to pay unsecured creditors, but can't pay the full amount.

Chapter 13 can give you stability to get back on your feet after a job loss, significant health issue or divorce.  



Your house is your most important asset and you want to protect it at all costs.
Chapter 13 can give you a way to catch up on your house payments and stop foreclosures if you file BEFORE the foreclosure date.
Be careful of workout agreements. You absolutely can pursue them but sometimes it does not stop the foreclosure process simply because one department is not aware of what the other department is doing.
Not having a vehicle can impact your job and ultimately lead to bigger financial problems.
Once your car is gone, the only way you are getting it back is to file either pay off what you owe or file bankruptcy BEFORE the car is sold at auction.
You don't always know when the creditor is coming to pick up the car.
Once a repossession is on your record, it is hard to obtain a new loan with a decent interest rate.

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Don't make a mistake that can cost you...

  • Being Able to File: Some people make mistakes that can delay filing for 6 months, a year, two years, ten years!  Don't make these mistakes by accident.  
  • Putting Friends and Family in Danger of a Lawsuit by the Trustee: We don't want you to put your friends and family members in the firing squad.  
  • Don't Give Up Money You Could Keep In Your Pocket: Find out what assets are protected and why sometimes paying things off can hurt you big time in the long run.
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Our firm has had years of experience in helping people file for bankrutpcy. Our clients receive compassion, practical advice, and patience during this process. We excel in providing value for your representation as we have handouts explaining questions you have, emails that specifically respond to your questions or help you understand what is required every step of the way. In Chapter 13 case, you will receive copies of everything filed in your case AND explanations on what the filings mean to you. Bankruptcy is full of potholes and we know how to avoid them. You will receive instructions on what NOT TO DO as much as what you NEED TO DO to so that your case will proceed as smoothly as possible.  

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We offer a 30 minute consultation with you. As part of your consultation, you will receive our FREE eBook on Bankruptcy and our Welcome Video to help you understand the basics and be ready for your appointment.  We want your time with the attorney to be about your questions.  
By the time you leave our office you will know...
  • How Bankruptcy Works: Budget, Means Testing, and Exemptions to Protect Your Property
  • How Bankruptcy Works In Your Specific Situation: Find out if you can keep all your stuff (house, car, property, tax refunds, etc).  When strategically it might be the right time for you to file your case.  Help you avoid making mistakes before you file your case.  
  • Is Bankruptcy the Right Fit For You: Why bankruptcy can help you get rid of your stress and give you financial freedom.  If it is not the right option, what else can you do to improve your finances.  

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