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What's the difference between Ch. 7 & Ch. 13 bankruptcies? Can I sell or list a NYC co-op apartment while declaring bankruptcy?

New York, NY |

I have a lot of debt and am maintaining the minimums , but am not making any progress . I am sometimes behind on my mortgage payments and credit card payments . I have over $ 40K in credit card debt after losing a salaried job and have only equity in an apartment that I am struggling to maintain . I have maybe $ 15 - 20K in equity , if it is sold . My credit is very poor .

Attorney Answers 5

Posted

Ch.7 wipes out your debt and is usually finished in about 3 months, IF it is a non-asset BK. Ch.13 lasts 3-5 years during which you make monthly payments into the Plan. In a Ch.13 you will have to get permission from tne trustee to sell your residence. This is VERY complex. Don't do anything without a consultation with a BK attorney. Good luck.

Be sure to designate "best answer." If you live in Oregon, you may call me for more detailed advice, 503-650-9662. Please be aware that each answer on this website is based upon the facts, or lack thereof, provided in the question. To be sure you get complete and comprehensive answers, based upon the totality of your situation, contact a local attorney who specializes in the area of law that involves your legal problem. Diane L. Gruber has been practicing law in Oregon for 26 years, specializing in family law, bankruptcy, estate planning and probate. Note: Diane L. Gruber does not represent you until a written fee agreement has been signed by you and Diane L. Gruber, and the fee listed in the agreement has been paid.

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Posted

A Chapter 7 eliminates all of your unsecured non-priority debt, while a chapter 13 reorganizes all or most of your debt. Your apartment will likely be no issue to the trustee if it is sold prior to the filing, however, the proceeds from that sale will be. I am an attorney in OH so I would advise you to contact an experienced bankruptcy attorney in your jurisdiction.

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Posted

You need to speak with an experienced bankruptcy attorney in your area as soon as possible. Most attorneys will have free consultations available and should be able to assist you with your case.

A Chapter 7 bankruptcy is a liquidation where all of your debts are discharge excluding certain debts such as student loans and some taxes. These cases normally last from 4-6 months from start to finish.

A chapter 13 bankruptcy is a reorganization where you make payments towards your debts over a 3 to 5 year period. If you pay anything to your unsecured creditors it will be a 0% interest and will be based on either your disposable income or the value of your personal property that you are keeping and that exceeds that allowable exempted amounts. These cases are normally filed by individuals that either do not qualify for a chapter 7 or that need to impliment something that is only allowed in a chapter 13 such as cramming down vehicles or catching up on mortgage payments.

Again, please speak wtih an experience bankruptcy attorney to assist you with your case.

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Posted

In a Chapter 7 Bankruptcy most common types of unsecured debts (for example credit cards) are eliminated. In a Chapter 13 Bankruptcy you would repay part or all of your debts over a period of 3 to 5 years. You would file a Chapter 13 Bankruptcy if you didn't qualify for Chapter 7 or if you feel behind in your coop and needed time to catchup. You can't sell your coop while filing bankruptcy. I recommend that you contact an experienced bankruptcy attorney for a consultation. Most bankruptcy attornies provide free consultation. You may go to my webiste for more information.

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Posted

The difference that you should be concerned about in your case is whether you qualify for Chapter 7 or not (if not, you/your attorney will file under Chapter 13). The reason is because Chapter 7 will, most likely, discharge more debt. I cannot be sure based on your specific situation, but generally that is the case for individual consumers with low income and little to no assets.

As noted before me, you can list and/or sell your real property, but be prepared to fork over the non-exempt proceeds to the Trustee. Your best bet is to find a reputable bankruptcy attorney in your area so that you can work on a specific strategy to discharge as much debt as possible based on your specific situation. Good luck on your fresh start, if you decide to proceed.

Disclaimer & Helpful Information: This answer is intended to provide legal information- not legal advice. Such materials are for informational purposes only and may not reflect the most current legal developments. Customized legal advice for your particular situation should be provided by a licensed attorney only after full disclosure of all relevant facts and after signing a retainer agreement with an attorney or law firm. SALMU LEGAL SERVICES PLLC: Alex Salmu, Attorney At Law | www.salmulegal.com | salmulegal@gmail.com | Phone: (248) 877-1016

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2 comments

Diane L Gruber

Diane L Gruber

Posted

Ch.13 and Ch.7 are mutually exclusive. If you qualify for one, you do NOT qualify for the other.

Alex Salmu

Alex Salmu

Posted

Right Ms. Gruber- I was merely pointing out the requirements and typical issues to consider when transforming a 13 to a 7. An individual could have qualified for 7 but mistakenly filed a 13, or vice-versa. Another possibility is that the income could have changed, such as winning the lotter a day after filing under Chapter 7. Thank you for your follow-up comment.

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