Wednesday, October 26, 2016

Is A Chapter 7 Discharge Different From A Chapter 13 Discharge?

If you have more debt than you can handle, bankruptcy is a good way to eliminate some or all of the things you are having a hard time paying. For most people, finances get tight when there is too much unsecured debt, like a high interest rate credit card. Many times making only the minimum payment on a credit card debt gets you nowhere fast, and in order to see any progress you have to think outside the box. Filing bankruptcy can help, because it will allow you to discharge some of your debts. A bankruptcy discharge is a legal entry in your case that the debts contained within your bankruptcy are no longer due. But there can be confusion over how the discharge actually works, because there are two main types of consumer bankruptcy cases.

The most desirable type of consumer bankruptcy is a Chapter 7, because it allows you to discharge all of your credit card debt. But some people file cases under Chapter 13, and this type of case will require you to pay back at least a portion of your unsecured debt. A discharge is a discharge, regardless of the chapter of bankruptcy you file, but you do need to know some key differences between a Chapter 7 and a Chapter 13 bankruptcy. Here are the major differences between the two:

         A Chapter 7 is more like a liquidation of debt, and all of your debt can be discharged. Most people do agree to continue paying for their house and car, but in a Chapter 7 you get to get rid of all of your unsecured debt. Chapter 7 cases usually take around 6 months to complete, and this timeframe gets you to the discharge of debt pretty quickly.
         A Chapter 13 is a reorganization of your debt, and requires you to file a plan of proposed repayment. You will have to propose to pay back part of your unsecured debt, while being allowed to discharge what is not repaid. In this way, the discharge is a bit different, because you do not get to eliminate unsecured debts in their entirety. A Chapter 13 can take up to five years to finish, and you will be given this entire time to pay back the part of your unsecured debt that will not be subject to the discharge.
In either case you benefit by reducing your total debt. If you are under financial pressure, consider filing for bankruptcy to relive the stress. Call us today for more information.

For more information about how bankruptcy can help you, contact us at We will help by coming up with solutions that work for you and have multiple locations to meet your needs for office visits.

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