The Difference Between Chapter 7 Bankruptcy and Chapter 13 Bankruptcy

When your finances are in turmoil, you may be considering filing for bankruptcy.  While this is not an option anyone wants to think about, sometimes there is no other alternative. For those considering bankruptcy, one of the first things that need to be understood is the difference between Chapter 7 bankruptcy and Chapter 13 bankruptcy. While there are similarities, there are tremendous differences as well.

  • Chapter 7 defined – The simplest form of bankruptcy, Chapter 7 literally wipes away consumer debt. Some assets such as a primary residence and automobile may be exempt depending on your individual case. It is important to consult with an attorney experienced in bankruptcy law to be certain you will be able to keep all of your property.
  • Chapter 13 defined – More commonly called wage-earners bankruptcy, this allows the debtor to restructure existing debt. Borrowers who do not qualify for Chapter 7 are often able to file Chapter 13.