Chapter 7 vs. Chapter 13

When it comes to seeking relief from your overwhelming debt through bankruptcy, you may wonder what the difference is when it comes to Chapter 7 vs. Chapter 13. Perhaps the biggest difference between the two is the way that debts are resolved. Under Chapter 7, most of your unsecured debts will be entirely discharged. A Chapter 13 filing reorganizes your debt into an affordable repayment plan, which lasts from three to five years, after which most remaining debt is discharged. There are also certain eligibility requirements for each type of bankruptcy.

At The Cline Law Group, our attorneys are committed to helping people figure out the best form of debt relief. For the past 40 years, our firm has helped countless individuals throughout California get the fresh financial start that they need.

Eligibility Requirements

In recent years, Congress has tightened up the eligibility requirements for Chapter 7 bankruptcy. Eligibility is now determined through a “means test,” which measures your income against households of a similar size. Although it is more difficult to qualify for Chapter 7 now than it has been in the past, it is by no means impossible. This form of protection can be ideal for those who have a large amount of unsecured debt, but who have a low income.

It is easier to qualify for Chapter 13 than it is for Chapter 7. There are certain limits on how much secured and unsecured debt you may have in order to qualify. However, for most people this is not a concern. Our attorneys will thoroughly review your situation to determine whether you may be eligible for this form of protection.

Debt Relief Under Chapter 7 vs. Chapter 13

Chapter 7 discharges unsecured debts, such as credit card debt, medical bills and certain types of loans. It is also possible to preserve most, if not all, of your possessions through exemptions. However, any property that is not secured or exempt may be subject to sale. This form of bankruptcy typically takes only a few months to complete.

Chapter 13 does not immediately discharge your debt. Rather, it reorganizes your debt into an affordable repayment plan that lasts from three to five years. At the end of the repayment plan period, most of your outstanding debt will be discharged. Obviously, this is a more lengthy process than a Chapter 7 filing.

Ending Creditor Harassment and Collection Actions

Regardless of which chapter you file, any relief that is sought through bankruptcy will result in an automatic stay. This has the effect of stopping creditor harassment and other collection actions, such as wage garnishment, lawsuits and repossessions. Both chapters can also put a stop to foreclosures. However, the means by which they stop foreclosure and the amount of time you are given to catch up on your payments do differ. We can help explain in depth what your options are for holding on to your home.

Explore Your Bankruptcy Options. Call for a Free Consultation With Our Oakland Lawyers.

If you are overwhelmed by debt, we can help you explore your options for relief. Contact our Alameda County bankruptcy attorneys online or call 510-464-8068 to schedule a free initial consultation to discuss your situation. The Cline Law Group is across from the Federal Building and located in the same building as the bankruptcy courts for Alameda and Contra Costa Counties. Hablamos español.

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.