Bankruptcy – Chapter 7 and Chapter 13

Bankruptcy can help wipe out your debts and provide immediate relief to stop foreclosure, prevent repossession, wage garnishments, stop law suits and creditor harassment.

There are many important differences between filing a chapter 7 or chapter 13 bankruptcy.

A chapter 7 (straight bankruptcy) will eliminate or discharge debts allowed under the Bankruptcy Code.  Certain debts that cannot be discharged in a chapter 7 are child and spousal support, most taxes, student loans, fraud and criminal penalties.  Most individuals filing a chapter 7 have general unsecured debt such as credit cards, medical bills, personal loans, lawsuits among many other kinds of debt.  You can still keep your home and your car as long as you keep making the payment to the lender.

A chapter 13 is usually referred to as a reorganization of debt.  In a chapter 13 you can pay some or all of your unsecured creditors such as credit cards, medical bill in one monthly payment without interest.  The advantage is there are no more late fees or credit card interest accruing.  If you are behind on your house payments, a chapter 13 can force your lender to accept payments allowing you to become current on the loan.  A chapter 13 also allows you to “strip” loans secured by your home (such as equity lines of credit or judgment liens) that are no longer secured due to the loss of value in your home.  Stripping a loan is usually available in a down market when home values are low.

There are unique and important difference in a chapter 7 and a chapter 13.  We will review your particular circumstances and help you determine which type of bankruptcy to file.