The major difference between seeking bankruptcy protection under Chapter 7 and Chapter 13 is that a Chapter 7 bankruptcy will actually discharge, or wipe out, many unsecured debts while a Chapter 13 bankruptcy sets up a payment plan whereby the debtor has 3 to 5 years to catch up on payments. In a Chapter 7 bankruptcy, you are able to keep certain types of property that are exempt, such as the equity in your home, the cash value of your insurance policies, retirement plans, most household goods such as furniture, clothing, appliances, books, a vehicle depending on the amount of equity in the vehicle, public benefits such as social security, unemployment benefits, or welfare benefits, and tools used for your job.
In a Chapter 13 bankruptcy, the focus is on repaying all or a portion of your debts, but at a much slower rate than originally agreed upon. You do not lose any of your property in a Chapter 13 bankruptcy, but in a Chapter 7 bankruptcy, certain non-exempt property can be liquidated by the trustee assigned to your case, and the proceeds used to pay a portion of your debts to your creditors. Chapter 7 is the simplest and quickest type of bankruptcy and is a liquidation bankruptcy. Chapter 13 is known as the wage earners bankruptcy and is essentially a rehabilitation plan designed for those with a regular source of income.
Contact the Bronson Law Offices, P.C. to schedule a consultation with our bankruptcy attorneys. We will help you decide which type of bankruptcy is right for your situation and answer whatever questions you have about the bankruptcy process.