Comparing Bankruptcy: Chapter 13 Vs. Chapter 7
To better understand the confusing differences of Chapter 7 and Chapter 13 bankruptcies, we have here a common situation and the corresponding process how a nonpayer is treated under each bankruptcy plan, the chapter 7 and 13.
Car Loans and Mortgages
Chapter 13: Nearly all of the time, you will be able to retain ownership of your house or car, especially when you keep your court approved payment plan current.
Chapter 7: One of the major dissimilarity of Chapter 7 and 13 bankruptcies is this scenario. So, if you have a car loan or mortgage, under chapter 7 you will lose possession of the property, returning it to the creditor or you also have the option to pay for it in full.
The debts you owned as a consequence of previous offenses
Chapter 13: You will still be obliged to pay these debts under the chapter 13 bankruptcy plan. However, if at the end of the payment scheme you still have unresolved debts, then there will be a tendency for these debts to be wiped out.
Chapter 7: It is most possible that your debts will not be forgiven especially when the creditor protests and is able to validate your previous deed, like a court conviction.
Student Loans, Child Support and Alimony
Chapter 13: In the event that you were not able to pay for these types of debt when the term given for the plan is over, you will still be obliged to pay the balance on these debts.
Chapter 7: These types of debts cannot be forgiven even if you are under the chapter 7 bankruptcy plan.
Proper settlement, Agreement or Divorce debts
Chapter 13: At the end of the chapter 13 bankruptcy term, any remaining balance left will be deemed as discharged.
Chapter 7: If there is an objection, usually coming from the creditor or spouse, then the debt is not erased. The debt can only be discharged for any of these two reasons: that you will still be incapable to shell out money for the debt even when the bankruptcy is over or the advantage of erasing out these overdue amounts surpasses the harm caused to the creditor.
Presence of a nonexempt Property with Value
Chapter 13: You will be able to retain ownership to the said property.
Chapter 7: The property will be surrendered to the appointed trustee. If you do not want to do this, you only have 2 options which are: to pay the trustee the equivalent market value of the said nonexempt valuable property or you can exchange the said property for another property of the same value, provided that the trustee concurs.
Paying the creditor in order to retain the secured property
Chapter 13: Through your bankruptcy plan, you can shell out money equal to the value of replacement plus interest over the length of time specified in your plan.
Chapter 7: You can still retain the secured property, but you need to pay for the wholesale value in lump sum.
You have already filed for a Previous Bankruptcy
Chapter 13: You still have the option to file for another bankruptcy
Chapter 7: You no longer have the option of filing another chapter 7 bankruptcy, unless your first bankruptcy filed was under chapter 13.
Your salary is adequate for a chapter 13 bankruptcy but you have filed for a chapter 7
Chapter 7: Your case may be dismissed by the court or the court may exchange it for a chapter 13 bankruptcy plan instead of the chapter 7 that you have originally filed for.
