Fall River Bankruptcy Attorney: What is the difference between Chapter 7 and Chapter 13 Bankruptcy?

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What is the difference between Chapter 7 and Chapter 13 Bankruptcy?

1. What is a Chapter 7 Bankruptcy case and how does it work?

Chapter 7 Bankruptcy is a legal proceeding under the jurisdiction of federal law, called the US Bankruptcy Code, in which a debtor seeks relief under Chapter 7 of the bankruptcy code. Chapter 7 of the bankruptcy code is the part of the US Bankruptcy Code which deals with liquidation. The US Bankruptcy Code is part of the federal law which deals with bankruptcy. The person filing a Chapter 7 Bankruptcy petition is what is called a debtor. In a Chapter 7 Bankruptcy case, a debtor must turn over his nonexempt property, or what are considered assets, if any exist, over to the US bankruptcy trustee, who then converts the property to cash and uses this cash to pay the debtor's creditors. In return for this, the debtor receives what is called a chapter 7 discharge, once the filing fee is paid, an individual is eligible for the discharge, and obeys the orders in the rules of the bankruptcy court.

2. What is a Chapter 13 Bankruptcy case and how does it work?

A Chapter 13 Bankruptcy case is a legal proceeding under the jurisdiction of federal law, called the US Bankruptcy Code, in which the debtor seeks relief under chapter 13 of the bankruptcy code. Chapter 13 of the bankruptcy code is part of the bankruptcy code in which the debtor can repay all or a portion of his debts under the supervision and protection of the bankruptcy court. The person filing a chapter 13 bankruptcy petition is what is referred to as the debtor. In a chapter 13 bankruptcy petition, the debtor then submits to the court a repayment plan for a portion or all of their debts owed to creditors. After submission of the repayment plan, it is then decided by the court if the plan is approved, once the plan is approved it becomes effective. Once the court approves the debtor's plan, most creditors will be prohibited from collecting those debts and claims they have against the debtor. Within a chapter 13 bankruptcy, the debtor must make regular payments to an official who is called the US Bankruptcy Trustee, who then in turn collects from the debtor monies, which it disperses to their creditors in a manner which is specified in the repayment plan submitted to the U.S. Bankruptcy Court. Upon the completion of all payments set forth in the repayment plan, the debtor is then released from any liability for the remainder of their debts, and is discharged from any future obligations to repay the debts.
3. How does a Chapter 13 case differ from a Chapter 7 case?

The main difference between a chapter 7 bankruptcy case and a chapter 13 bankruptcy case is that in a chapter 7 bankruptcy, the debtor's property which is nonexempt (if any actually exists) is liquidated by the US bankruptcy trustee to pay as much debt as possible of the debtor, as opposed to a chapter 13 bankruptcy case in which a portion of the debtor's future income will be used to pay off as much of the debtor's debts that is feasibly possible under the particular debtor's circumstances. A reality of the chapter 7 bankruptcy case is that the debtor loses all or most of his nonexempt property in which to receive a chapter 7 bankruptcy discharge, which releases the bankruptcy petitioner from liability of most, if not all of their debts. Conversely in a chapter 13 bankruptcy case, the debtor usually retains all of their nonexempt property, but must pay off as many debts as the U.S. Bankruptcy Court deems feasible and receives what is called a chapter 13 bankruptcy discharge, which is slightly broader than a chapter 7 bankruptcy discharge and releases the debtor from liability for a few years of debts that are not dischargeable under the chapter 7 bankruptcy laws. However a chapter 13 bankruptcy case normally lasts much longer, 3 to 5 years, as opposed to a chapter 7 bankruptcy cases which will usually only lasts between 4 to 5 months and a chapter 13 cases are usually more expensive for the debtor.
We are a Debt Relief Agency and help people file Chapter 7 Bankruptcy and Chapter 13 Bankruptcy under the US Bankruptcy Code.

Joseph F. Botelho, Esq.

BOTELHO LAW GROUP
Attorneys At Law

901 Eastern Ave.
Unit 2
Fall River, MA 02723

Office: 888-269-0688

Email: jbotelho@botelholawgroup.com

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