What is the Difference Between Chapter 7 and Chapter 13?

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What is the difference between chapter 7 and
chapter 13?
A Guide for Consumers Filing for Bankruptcy
Protection
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Chapter 7 and Chapter 13
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• Chapter 7 and Chapter 13 bankruptcy are the most
• common types of bankruptcy
• that consumers file

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Both can provide relief from your debts
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When you file for Chapter 7 or Chapter 13,
collections activities against you must stop
immediately
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There are important differences between Chapter 7
and Chapter 13
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Chapter 7 Bankruptcy
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Chapter 7 is a liquidation bankruptcy
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Non-exempt assets are sold in order to pay
creditors back money that is owed
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After creditors are repaid from the sale of
assets available funds, eligible debts are
discharged
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You do not have to pay them back
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Chapter 7 is Means Tested
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To file for Chapter 7 bankruptcy protection, you
must make less than the median income in your
state for families with your household size
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If you make more than the median, you cannot file
Chapter 7 unless you pass a means test showing
you dont have disposal income to pay towards
your debts
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Chapter 13
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Chapter 13 is different from Chapter 7 because
it does not require the sale of assets
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You can keep all of your possessions in Chapter
13
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Chapter 13 requires the creation of a repayment
plan that creditors approve
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You must pay back a portion of your debts over
3-5 years
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At the end of the payment plan, the remaining
debt balance is discharged
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Chapter 13 is Wage Earners Bankruptcy
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You are not required to pass a means test in
order to file for Chapter 13 bankruptcy
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People with an income that is too high for a
Chapter 7 filing can get relief from their debts
by filing a Chapter 13
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Learn More About Bankruptcy in Long Island
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Click to visit www.ny-bankruptcy.com