The Key Differences between Chapter 7 and Chapter 13 Bankruptcies
Chapter 7 bankruptcy and Chapter 13 bankruptcy are the two most common forms of bankruptcy, likely due to their many similarities. For instance, both can be applied for by individuals and businesses, and both involve some form of debt reduction or elimination. However, there are key differences between Chapter 7 and Chapter 13 bankruptcy that every debtor should be aware of when considering which form is right for him or her.
If you or someone you know is thinking of filing for bankruptcy and wants to know more about the different forms of bankruptcy, contact an experienced Cedar Rapids bankruptcy lawyer of Hong Law, PLC, today by calling (319) 294-5853 to discuss your options.
What Are the Differences?
The most important difference, for most, between Chapter 7 and Chapter 13 bankruptcies involves the issue of asset liquidation. Chapter 7 bankruptcy, in some instances, may require a debtor to liquidate, or sell, some assets in order to repay creditors. Fortunately, many exemptions exist that can help debtors protect their belongings from liquidation. Chapter 13 bankruptcy on the other hand does not involve asset liquidation. Other differences between the two include:
- Formulated repayment plans in Chapter 13
- Implementation of the means test to qualify for Chapter 7
- Longer time frame for repayment in Chapter 13
Each of these differences is important, but most debtors are more concerned with the issue of asset liquidation. While not all assets qualify for liquidation, some items can be liquidated in Chapter 7 bankruptcy to reduce debt. However, for those who want to retain control of their assets, or those who are interested in making payments on their outstanding debt, Chapter 13 might be the more attractive option.
If you or someone you know has been facing financial struggles and needs to consider filing for bankruptcy, contact a qualified Cedar Rapids bankruptcy attorney of Hong Law, PLC, today at (319) 294-5853.
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