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How do Chapter 7 and Chapter 13 bankruptcies differ?

On Behalf of | Sep 16, 2021 | Chapter 13 Bankruptcy, Chapter 7 Bankruptcy, Consumer bankruptcy |

When your debts start spiraling out of control due to medical emergencies, job loss or other circumstances, you may feel as if you have reached the end of your rope. You may feel especially stressed if you have creditors calling you at home or at work, in which case you may be seeking a way to put a stop to it.

Per Quicken Loans, one way you may be able to get a better grip on your debts is by filing for personal bankruptcy. When you file for personal bankruptcy, you do so through one of two methods: either a Chapter 7 or a Chapter 13 filing.

Chapter 7 bankruptcies

A Chapter 7 bankruptcy is sometimes known as a liquidation proceeding. When you file for Chapter 7, you may have to turn over your home, car or other assets to start paying back some of your creditors. Whether you have to do so depends on several factors, among them how much equity you have in the home.

Chapter 13 bankruptcies

With a Chapter 13 bankruptcy filing, you may be able to keep your home if you want to do so. You should be able to hang on to your home as long as you stay current on your mortgage and create and stick to a repayment plan that pays off at least some of your debts.

Whether you may file for Chapter 7 depends on whether you meet certain income criteria. Your ability to file for Chapter 13 depends on whether you have a steady income and debts that fall within a certain range.