Which Is Better Chapter 7 Or Chapter 13 Bankruptcy
Chapter 7 and Chapter 13 bankruptcies are completely different from each other. Several people choose the Chapter 7 bankruptcy because of its various advantages. Here are some of the advantages and disadvantages of both the plans. |
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A Chapter 7 bankruptcy is also called the liquidation plan because in this type of bankruptcy all your assets that you have listed are going to be sold off to pay off your debts. It is the quickest method of filing for bankruptcy. It also costs a lot less than the other bankruptcy plans. In a Chapter 7, all your debts are disbursed off in one single shot by a court appointed trustee. The debts are prioritized and then your assets are sold off. With whatever amount they get from your assets, the debts are paid off. Whether the debts have been paid off in full or half, they are closed after filing for bankruptcy. Your credit report is not harmed to that extent and you can get back to your life one fresh slate almost immediately after the case is closed.
In a Chapter 13 bankruptcy your assets are safeguarded, but the court asks you to pay your debts on a long term basis. It may take 7 to 11 years to complete the obligations of debts as per the court plan. The court mainly orders the assets you want to save and also disburses most of your income to paying off debts. The bankruptcy case remains open as long as the debts have to be cleared off. If you do not make regular payments to the court, then your credit rating will turn worse.
Based on this information, you can decide which is better -- Chapter 7 or Chapter 13 bankruptcy.
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