Difference between Chapter 7 and Chapter 13 Bankruptcy

How Would Someone Know Which Bankruptcy Is Going To Be Right For Them?

It is kind of complicated and it really depends on each situation. Some people can go either way and it depends on their personal preference, but there are some flags to look for. First of all, if you are facing a foreclosure, or you are falling behind on your mortgage and you want to keep your house, then you probably are looking at a chapter 13. However, that is not always true.

Sometimes you are able to do that in a chapter 7, but that is one big thing that makes you start to look towards the chapter 13 issues. Another situation can be if you do not own a house and you make less than the median income, then you are eligible for a chapter 7. A chapter 7 is usually the way to go because it is quicker, easier, and possibly cheaper. It can be less of a hassle. Moreover, you do not have to pay into a plan for three to five years. Whether you own a house or a significant amount of assets, it is usually the determining factor along with your income level.

Is Filing For Chapter 7 Bankruptcies Harder Or Easier To File Or Qualify For Than The Chapter 13 Bankruptcy?

The chapter 7 is easier in the sense that you are not filing a chapter 13 plan so you do not have that part of it. When you file chapter 13, there is a confirmation hearing. In a chapter 7, that is not necessary so. Also, you do not have to continue to deal with the trustee over the time period that you are paying on the plan. Therefore, chapter 7 is definitely recommended.

Is Filing For Chapter 7 Or Chapter 13 Better Than The Other?

The general understanding is that chapter 13 will not affect your credit as much. It is not going to have as negative of an effect on your score and it is not going to stay on your credit reports for as long as a chapter 7.

A lot of people are really concerned about what is going to happen to their credit. However, in practicality, when you look at your credit, if you file bankruptcy, even though there is a negative effect on the credit, it is usually going to help you build your credit back up faster. A bankruptcy will stay in your history but it will also get all of those negative items off of your credit. It will give you a chance to start building up good credit again.

With the chapter 7, it stays on there for longer and it has no negative effect. Whether or not you file a chapter 7 or a chapter 13, or not at all, it really should not effect by your concern for your credit scores. There is a lot of good ways to build your credit back up after you file for bankruptcy. Some of the negative effects are really outweighed by the positive. It is true that chapter 13 has less of an impact.

How Long Does It Take To Go Through The Bankruptcy Process In A Chapter 7 v. 13?

Chapter 7 is going to take you about 4 months from the time that you walk into an attorney’s office to the time that it is officially done. There is a period of time when your creditors have the opportunity to object to your bankruptcy. However, that almost never happens, especially if you have an attorney that knows what they are doing. They can file things the right way and if there is a problem, they will notice it ahead of time.

In practicality, as soon as you file, the automatic stay goes into effect. That is the stay that comes from the bankruptcy court itself. It prevents your creditors from contacting you asking you for money, or taking any money from you. As soon as the filing is made, it is almost instant relief. As soon as the creditors get notice, they have to stop contacting you.

You have a few administrative items that you have to take care of but really it is very quick. With the chapter 13 process, it is longer. You are going to reorganize and go through the process. So, depending on your income level and depending on how much debt you have to pay back ,and how long you want to take , it can last between three and five years.

Read about the Difference between Chapter 7 and Chapter 13 Bankruptcy, or call the Koehler Law Offices PLLC for a FREE 20 Minute Initial Consultation at (801) 200-3795 and get the information and legal answers you’re seeking.

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