CHAPTER 7 OR CHAPTER 13?
There are differences between Chapter 7 bankruptcy and Chapter 13 bankruptcy. If you're not sure how you should file, take a look at these frequently asked questions and contact Boleman Law today for a
free consultation.
Your Goal
Chapter 7: To eliminate most debts for a fresh start.
Chapter 13: Partial repayment of debts based on what you can afford, reorganize secured loans, stop foreclosure and repossession, and protect your property.
Who Can File?
Chapter 7: You are generally eligible if your average monthly income for the previous six months is less than the median income for a household your size in your county. If you make more than the median and do not have special exceptions, you need to consider Chapter 13.
Chapter 13: Anyone with regular income, less than $1,081,400 in secured debt (like home and car loans), AND less than $360,475 in unsecured debts, like credit card, medical bills and other loans.
Will I Need a Lawyer?
Chapter 7: Though you can do it yourself, hiring a good lawyer will make it easier and likely prevent you from making expensive mistakes. See our section on how to
choose a good bankruptcy lawyer. Bankruptcy is a complex area of the law and impacts your property and your money. The vast majority of cases filed without counsel are dismissed, especially in Chapter 13.
Chapter 13: Absolutely. Though you can do it yourself, hiring a good lawyer will make it easier and likely prevent you from making expensive mistakes. See our section on how to pick a good lawyer. Bankruptcy is a complex area of the law and impacts your property and your money.
Can I Keep My Car?
Chapter 7: Because a Chapter 7 is a Liquidation bankruptcy, the trustee is required to sell assets, like cars, that have value beyond what can be protected.
Chapter 13: Most often yes because in a Chapter 13, a debtor is repaying some, part or all of what they owe, based on what they can afford.
Can I Keep My House?
Chapter 7: If you have serious mortgage problems, a Chapter 7 filing will probably not help much. A filing may halt
foreclosure proceedings for only a couple of months and missed payments may be due in full and immediately.
Chapter 13: A filing will generally halt foreclosure proceedings and may allow you to make up missed payments over time.
Can I Keep My Other Possessions?
Chapter 7: Anything you own that hasn’t been exempted by law can be taken by the trustee and auctioned to raise cash for your creditors.
Chapter 13: You usually can keep everything if you keep up your payment plan.
What About Taxes Owed?
Chapter 7: You probably will have to pay in full what you owe the IRS for recent tax years. Sometimes you can get a break on older tax debts.
Chapter 13: You probably will have to pay in full what you owe the IRS for recent tax years. Sometimes you can get a break on older tax debts. However, a Chapter 13 plan may be able to provide for you to pay your tax debt over time with no penalties and interest.
What About Back Child Support?
Chapter 7: You probably will have to pay in full what you owe.
Chapter 13: A Chapter 13 plan may be able to provide for you to pay your child support arrears over time.
What About Fines Owed?
Chapter 7: Court fines and/or restitution can not be included in any bankruptcy and must be paid.
Chapter 13: Fines cannot be "discharged", although bankruptcy may be able to provide some relief from collection activity (the automatic stay).
Will I Have to Pay Alimony?
Chapter 7: If you have on-going alimony or spousal support obligations, these will continue and must be paid.
Chapter 13: Like child support arrears, back alimony or spousal support may be able to be included in a Chapter 13 plan. However, you must make all post-petition (after filing) payment in order to obtain a discharge.
How Long Will it Take?
Chapter 7: Generally, about six months after filing a discharge order will be entered. This order is the document that provides that you are no longer legally obligated on the debts included in your bankruptcy. However, certain debts, like taxes, child support and those the court may specify will not be included in the discharge.
Chapter 13: Generally, a Chapter 13 can run between three to five years depending on what you owe, what you own and what you can afford. Once the final payment is made under your plan, a discharge order will be entered This order is the document that provides that you are no longer legally obligated on the debts included in your bankruptcy. However, certain debts, like some taxes, child support and those the court may specify will not be included in the discharge.
What Does it Cost to File?
Chapter 7: The filing fee to the Bankruptcy Court is currently $299. The attorney’s fees will vary depending on the complexity of the case you have. Our attorneys work closely with you to make it as reasonable as possible under the circumstances.
Chapter 13: The filing fee to the Bankruptcy Court is $274. Unlike Chapter 7, the attorney’s fees for a Chapter 13 are set by the court, most of which can be paid through your Chapter 13 plan.
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