Chapter 7 Or Chapter 13 Bankruptcy Know The Difference
If someone is facing bankruptcy then he or she can file for bankruptcy to get out of the debt
. There are many ways of bankruptcy filing depending on the process. These ways of getting out of bankruptcy are named as chapters. Chapter 7 and chapter 13 are two of those ways. Let me tell you about the differences between them. However, before understanding the differences, you must know that both the chapters serve the same goal of giving you relief from a portion or from the entire debts. Their approaches are different and thats what I will explain to you now.
1. Repayment
The repayment methods are the biggest difference of chapter 7 and chapter 13. The chapter 13 is a debt repayment plan set by a court order. For this plan, a part of your debt will be paid to the lender. The chapter 7 is entirely different on this matter as there is no need to repay any debt. This is a plan to eliminate some of your debts. So you can surely see that with chapter 7 and chapter 13, you have different options for saving your entire or part of the debt.
2. Length of the process
The filing process of the bankruptcy takes some time. The time differs with the type of bankruptcy filing. The lengths of the processes are different for chapter 7 and chapter 13 too. The chapter 7 bankruptcy filing takes rather shorter time. It settles the matters within 6 months from the filing date. On the other hand, chapter 13 is a much longer process. It, at times, takes 5 years to settle the case.
3. Asset and liquidation
The chapter 13 bankruptcy helps you to protect your assets. The chapter 13 procedure can help you to save your assets like home and car that are under foreclosure. Chapter 13 is not a bankruptcy of liquidation and thats why you can save some of your assets. The chapter 7 bankruptcy is a liquidation bankruptcy and thats how the court can liquidate your assets if they are not protected. The state can protect a portion of your car or home equity.
4. Repayment method
The chapter 13 and chapter 7 have different debt recovery method. In chapter 13 a repayment plan will be made for you and will be followed. In chapter 7 bankruptcy, your properties will be sold to repay a portion of your debt and the rest of the debt will be discharged for you.