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How do Chapter 7 and Chapter 13 bankruptcies differ?

On Behalf of | Sep 29, 2021 | Bankruptcy, Chapter 13, Chapter 13 Bankruptcy, Chapter 7, Chapter 7 Bankruptcy

Many Oregon residents are facing increasingly overwhelming debt. Sometimes, the debt compiles as a result of major medical bills. Other times, it is the result of unemployment or an unforeseen emergency. Regardless of how you accumulate debt, you may be able to find relief through filing for personal bankruptcy.

According to Quicken Loans, there are two types of consumer bankruptcies. The first is the Chapter 7 bankruptcy, and the second, the Chapter 13 bankruptcy. Once you file for either type, something called the automatic stay comes into play, meaning creditors may no longer contact you while your case is ongoing.

Chapter 7 bankruptcies

Intended for those with limited income or means, Chapter 7 bankruptcies are “liquidation” bankruptcies. This means you may have to liquidate some of your assets, such as your car or home, to pay back some of your debts. Once you sell assets considered “secured,” the rest of your debts undergo discharge, giving you a chance to make a fresh start.

Chapter 13 bankruptcies

Sometimes referred to as “reorganization bankruptcies,” Chapter 13 bankruptcies require that you create and stick to a payback plan that enables you to pay off a portion of your outstanding debts. Most of the time, if you keep up with the terms of the plan and any car or mortgage payments you have, you are not going to have to turn over your assets with this type of filing. Most Chapter 13 bankruptcies take somewhere in the realm of three to five years to finalize.

There are a number of additional differences that exist between the two types of consumer bankruptcies, including how you determine eligibility and how long it takes for your debts to undergo discharge.


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The Law Office of Kim Covington is a debt relief agency, and I have helped families, individuals and small businesses, file for bankruptcy relief under the U.S. Bankruptcy Code, for over 22 years.