Register to PHPLD
Lost password?
Bankruptcy Laws HQChapter 7 & 13 Differences

Difference between Chapter 7 and Chapter 13 Bankruptcies

Bankruptcy is an option to consider if you have a significant amount of debt and can no longer pay your bills. It should be a last resort, but it could help you receive a fresh financial start in life. Two types of bankruptcy to consider are Chapter 7 and Chapter 13.


Chapter 7 bankruptcy permits you to liquidize all of your debts, and Chapter 13 bankruptcy, which is handled by the federal court system, is a structured plan to repay your debt. With Chapter 7, you will be required to relinquish most of your assets, but with Chapter 13, you will be allowed to keep your home and other assets. With Chapter 7, your debts are forgiven. However, you will still be required to pay alimony, taxes and child support.


Chapter 7 bankruptcy still requires that you pay all of your taxes that are less than three years old; however, taxes are a part of the restructured plan with Chapter 13 bankruptcy. In addition, one of the main disadvantages of filing for bankruptcy is that it really hurts your credit. If you file for Chapter 7 bankruptcy, it will stay on your credit report for ten years, and Chapter 13 bankruptcy will only remain in your credit file for seven years.


After filing for bankruptcy, it might be difficult to get new credit. You can apply for new credit anytime after your Chapter 7 bankruptcy is complete; however, with Chapter 13 bankruptcy, you must get permission from the court. The prices for both types of bankruptcy are about the same.


To qualify for Chapter 7 bankruptcy, you need to have a monthly income that is less than the median income that is in your state. If you do not qualify for Chapter 7 bankruptcy, you will need to file for Chapter 13 bankruptcy.


Both types of bankruptcies have pros and cons that you need to consider. If you are thinking about filing for bankruptcy, you need to decide which one is best for you, and you can then begin to get your life back on track again.


Previous post: Can I File Bankruptcy Without An Attorney?

Next post: Bankruptcy’s Effects on Your Credit Report