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What is the difference between chapter 7 and chapter 13 bankruptcy?

Bradenton, FL |

We have an exorbitant amount of medical bills and a few credit card bills. We do not own a home or property or have any assets other than our vehicles. Which bankruptcy would be appropriate for us?

Attorney Answers 5


  1. The determination that will identify which chapter of bankruptcy is appropriate for you is what kind of income and assets you have. If your income is higher than a certain number, you will need to file a Chapter 13 and make regular payments against all or a portion of your outstanding debt. If you make less than a certain amount, and you have relatively few assets, Then chapter 7 would probably be your best option. The income qualification is done through a process called the "means test", and any qualified bankruptcy attorney can help you assess your eligibility for chapter 7.


  2. You will most probably qualify for a Chapter 7, and if you do, most if not all of your debt will go away, giving you the "fresh start" that you are seeking. Good luck!

    If you think my response is the best response, it would help me if you would indicate that. Also, please note that my responses to question(s) are NOT legal advice from me to you because I am NOT your lawyer, you are NOT my client, and we do NOT currently have an attorney-client relationship. Thanks!


  3. A chapter 13 bankruptcy is where you would pay back your creditors anywhere from a percent to all of the debt back over a period of 3 or 5 years. A chapter 7 bankruptcy is a liquidation in which you wouldn't pay back any of your debt to the creditors. Which chapter bankruptcy you file will be determined by several factors such as your income and whether you have any assets you would lose by filing a ch. 7 bankruptcy. From the information you entered you would most likely file a ch. 7 bankruptcy as long as you qualify under the Means Test. You should speak with a qualified, local bankruptcy attorney to determine which chapter is best for you. Most attorneys will give you a free, initial no obligation consultation. You may want to contact the local bar association or you can visit www. NACBA.org for a qualified attorney in your area.

    This answer is to be considered general advice and may not be the actual law in your jurisdiction. It also does not constitute an attorney-client relationship or privilege.


  4. To determine whether you would qualify for a Chapter 7 bankruptcy, we would need to review your income to determine whether you meet the means test. We would also want to review the value of your vehicles and any other assets to ensure that you would not lose any assets in the Chapter 7 proceeding. If your income is too high for a Chapter 7, you would need to file Chapter 13 , which involves entering into a payment plan with the court. Note that you do not need to pay off all of your debts in a Chapter 13; rather, you must pay what the court determines that you can afford, and the remainder of your debt can usually be discharged. This is a complex analysis, and you would be well advised to consult with a local bankruptcy attorney to make sure that you understand all of your options.


  5. Chapter 7 allows you to liquidate your assets and not have to pay most creditors back. Chapter 13 is a reorganization of your debts and setting up a plan to pay back creditors based on your income etc. If you do not have assets (house or property), then you will most likely qualify for a Chapter 7 which allows you to rid the medical bills and credit cards while retaining the assets that you have (car, furniture, clothing, jewelry etc.) through exemptions.

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