Chapter 7 and Chapter 13 are two common bankruptcy programs available to individuals to discharge their debts. If you ever got confused between the two, here is a quick what, when, and why to help you learn their differences.
What is Chapter 7 Bankruptcy?
Chapter 7 bankruptcy is a liquidation bankruptcy. Your non-exempt assets are sold by the court trustee to repay your creditors.
When is Chapter 7 Bankruptcy Needed?
When your debt becomes completely unmanageable, and you want a quick discharge to restart your financial life.
Why is Chapter 7 Bankruptcy Important?
It helps eliminate the risk of debt trap that, otherwise, individuals could fall into if they can’t keep up with the repayments.
What is Chapter 13 Bankruptcy?
Chapter 7 bankruptcy is a reorganization bankruptcy. Rather than a discharge, your repayment schedule is reorganized based on what you can actually pay.
When is Chapter 13 Bankruptcy Needed?
When you are struggling to repay your debt but don’t want to risk losing any of your assets.
Why is Chapter 13 Bankruptcy Important?
It allows you to prevent foreclosure or selling off of your assets by creditors by making repayment more manageable.
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