3 Main Differences in Chapter 7 and 13 Bankruptcy

Finding yourself suffocated in a mountain of debt is never easy. Admitting that the problem lies in your poor spending habits can take years, and by then, you may only be faced with a few choices.

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One of those ways out may be filing bankruptcy. A chapter 7 lawyer orlando fl is one person who may be able to help you shed some of the weight that pulls you down. Chapter 7 and Chapter 13 bankruptcy filings are the two most popular means for individuals and couples to get a resolution to the suffocating problem. Find out three of the key differences between the two, so you can decide if one will work better for you.

1. Chapter 7 Liquidates Some Assets 

When you think of bankruptcy, you probably envision someone telling you what you can and can’t keep. Chapter 7 filing, is as close to this vision as any other route. A trustee is appointed who will help you put your debts in order from secured to unsecured. The trustee will also review all of your assets and suggest the things that should be liquidated or given back to the lienholder in the case of secured debt. Some states allow you to keep your home and a vehicle under Chapter 7.

2. Chapter 13 Creates a Payment Plan

Chapter 13 may work for those who have enough income to pay off some of their debt in installments. Again the trustee puts obligations in order and then helps negotiate a reasonable sum for each. All of the debts are added and split into monthly payments which last from three to five years. Once the payment plan is fulfilled, the remaining debt is discharged from the credit.

3. Chapter 7 Stays on Your Credit Longer

Chapter 7 bankruptcy may be helpful to take care of sizeable debt; however, since you are not paying everything off, it can linger on your credit longer. A typical Chapter 7 remains ten years after discharge. Chapter 13 is usually gone after seven years.

Speaking with someone about your options is the best way to go when facing an uncertain future.

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