Chapter 7 or Chapter 13?

William James Rogers

Written by

Bankruptcy Attorney

Contributor Level 13

Posted about 3 years ago. 1 helpful vote

Email

1

Significant features of Chapter 7

- It's fast -- usually 3-4 months from start to finish. - If you make less than the median income for your family size/situation in your state, you can file a Chapter 7 case - If you make more than the median income, you can still file a Chapter 7 case if you pass the "means test" - You don't have to make monthly payments to a trustee - You get to keep all your property which is exempt -- exemptions vary from state to state (MN allows a homestead exemption up to $360,000, and one motor vehicle up to $3,450). - You get to keep your property like your house and car as long as you keep paying any loans due - You have to give up any property which is not exempt -- this can be a little or a lot depending on your particular case and state

2

Significant features of Chapter 13

- If you make more than the median income for your family size/situation in your state, you will usually have to file a Chapter 13 case unless most of the debts were not for personal purposes - You have to make monthly payments based on a formula to a Chapter 13 trustee for up to five years - You can catch up on overdue secured debt payments. If your budget will allow it, you can keep your house or car secured by that debt - You can stop a foreclosure or repossession - You can get rid of a second mortgage on your house if the house is worth less than the first mortgage -- this is called "lien stripping" (but not necessarily in the Dist. of Minnesota) - You can settle your unsecured debts over time -- usually without payment of interest

Additional Resources

Rogers Law Office

RLO Blog

Rate this guide

Related Questions

Can't find what you're looking for? Ask a Lawyer

Get free answers from experienced attorneys.

 

Ask now

29,230 answers this week

3,117 attorneys answering