Chapter 7 bankruptcy and chapter 13 bankruptcy have many similarities; both are ways to get a fresh start on your financial life, and both have lasting implications for your ability to secure credit. They also have many important differences, and knowing which the right choice is for you can save you thousands of dollars.
- Chapter 7 Bankruptcy
Chapter 7 bankruptcy is also called Chapter 7 liquidation. It involves liquidating your assets to repay creditors. Declaring Chapter 7 bankruptcy will discharge the majority of your unsecured debts and get you the fresh start you are looking for.
- Chapter 13 Bankruptcy
Also called reorganization, Chapter 13 bankruptcy is closer to a repayment plan than bankruptcy as most people understand it. Under a Chapter 13 bankruptcy, you will arrange a 3 or 5year repayment plan to bring your accounts to zero.
It can be very difficult to keep property, such as the family home or cars, under a Chapter 7 bankruptcy. Under Chapter 13, you’ll keep your home, car, and other property. The upside to Chapter 7 is that debts are discharged 90 days after your filing date, instead of 3 to 5 years later. However, Chapter 7 bankruptcy can result in longer-lasting damage to your credit report, so weigh these options carefully.
Consulting with a bankruptcy attorney is the best way to determine the correct course of action. For many people, the correct course of action is to not file bankruptcy at all! Cutler & Associates has been representing the Windy City community in their chapter 7 and chapter 13 bankruptcies for 20 years. We can help end creditor harassment, collection calls, and foreclosure, so contact us today for peace of mind tomorrow.