What’s the Difference Between Chapter 7 and Chapter 13 Bankruptcy?

If You Are Considering Bankruptcy, Speak with an Experienced Bankruptcy Attorney in Marietta Before Proceeding. Call (770) 629-0154 to Schedule Your Free Consultation.

Insurmountable debt is highly stressful and can wreak havoc on your personal, emotional, and financial life. Pursuing bankruptcy unnecessarily or filing for the wrong kind can do even more damage to your credit, assets, and financial future. If you are considering bankruptcy as a potential solution to your financial troubles, do not proceed without consulting a bankruptcy lawyer in Marietta. At Busch, Reed, Jones & Leeper, P.C., we are here to help you evaluate your options and empower you to make smart moves toward resolving your debts. Our consultations are free, and we are prepared to begin serving you as soon as possible.

In the meantime, understanding the different kinds of bankruptcy available may help you evaluate your options and consider the status of your various debts.

Chapter 7 Bankruptcy: Liquidation

In short, Chapter 7 bankruptcy is all about clearing you of all unsecured debts. (Unsecured debts are loans given without provision of collateral, such as telephone bills, credit cards, personal loans, and others.) This is tends to be an option for low-income filing parties and businesses. If the majority of the debts that are creating an unsupportable financial burden for you are unsecured and your disposable income is at or near zero, Chapter 7 bankruptcy may provide a viable path forward for you. However, be advised that being approved under Chapter 7 typically requires that you pay your creditors back as much as possible by selling some of your nonexempt assets and property. For more information as to which of your assets may be considered nonexempt, get in touch with one of our experienced bankruptcy attorneys.

In many ways, Chapter 7 provides you with a clean slate and allows you to start fresh. You are typically not required to make any back-payments or catch up on any of your debts. However, you will still be required to make support payments for ex-spouses and children and complete government-ordered payments relating to fines and criminal charges.

Chapter 13 Bankruptcy: Restructuring

The purpose of Chapter 13 bankruptcy is to reorganize your personal debts in order to pay off as much as possible over a certain amount of time (typically 3-5 years). This type of bankruptcy does not require you to sell your nonexempt assets like Chapter 7, but approval typically comes with the requirement that you will pay your creditors an amount comparable to their total value. At the end of your payment period, the remaining balances of your debts may be discharged.

Approval under Chapter 13 allows you the opportunity to make back-payments on mortgages, auto loans, and other substantial debts. However, at the end of your repayment period, you may not be required to make payments on any divorce-related debts, excluding support payments.

What to Do Before Filing for Bankruptcy

There is much to consider before making any official progress toward being relieved of the debts that are weighing you down. You may do more long-term damage than good if you do not enlist the help of a seasoned professional in the process of evaluating your financial state and your bankruptcy options.

It happens far too often that people file for bankruptcy without needing to do so. Even if you do not need to declare bankruptcy but file anyway, you will still reap the personal and financial consequences for years to come. At Busch, Reed, Jones & Leeper, P.C., we are committed to helping you evaluate all your options and taking the best steps forward when seeking to resolve your debts.

Your first meeting with us is free. Call (770) 629-0154 to speak to a member of our team or contact us to tell us how we can best serve you.

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