Chapter 7 vs. Chapter 13 Bankruptcy
Do you know the difference between Chapter 7 and Chapter 13 Bankruptcy?
We invite you to preview the quick checklist to the right, for a side by side comparison. In addition, we have a comprehensive explanation below for more information on filing bankruptcy in Pennsylvania, schedule a FREE consultation or use the quick links below.
A Chapter 7 bankruptcy allows individuals to discharge most or all of their unsecured debt in order to get their financial situation under control. Dischargeable unsecured debt includes credit cards, personal loans, lawsuits, medical bills, utility bills and even some types of unpaid taxes. For the most part, those who are current with their mortgage payments and vehicle payments find a Chapter 7 bankruptcy may be a helpful solution to financial problems.
Filing for Chapter 7 bankruptcy has other advantages other than eliminating your legal liability to repay your unsecured debt. Upon filing of the bankruptcy petition, creditors and collection agencies will be prohibited from contacting and harassing you for your debt. Also, all legal action must cease. For this reason, Chapter 7 bankruptcy is extremely advantageous, as creditor harassment is one of the worst effects of having unpaid debt. Furthermore, Chapter 7 can also stop execution sales, frozen bank accounts and eliminate liens on your property.
Chapter 13 bankruptcy is a debt repayment plan for individuals. It allows individuals to protect a house from foreclosure while catching up on past-due mortgage payments. It also allows individuals to reduce debts by paying a discounted amount over time. The repayment plan is created to repay a specified amount to creditors for a period of three to five years. At the end of the plan, all eligible debts are discharged.
Chapter 13 is a forum where secured debts, such as car loans or second mortgages, can be appropriately addressed. Sometimes second mortgages can be eliminated altogether. Vehicle payments can usually be drastically modified or reduced in Chapter 13. The Chapter 13 reorganization my also be attractive.