Chapter 7 and Chapter 13 bankruptcy handle debt in different ways. Chapter 7 is a complete liquidation, while Chapter 13 is a debt restructuring that comes in more than one variation. Some types of debt also cannot be discharged in Chapter 7.
Frequently Asked Questions
What’s the difference between Chapter 7 and Chapter 13 bankruptcy?
The difference between Chapter 7 and Chapter 13 bankruptcies is nuanced, but to boil it down to its simplest terms, a Chapter 7 is a complete liquidation. It wipes out the debts. You start out fresh. Now, there are certain types of debts that cannot be discharged in Chapter 7 bankruptcy. A Chapter 13 is more of a restructuring of your debts.
Now, what a lot of people don’t know is that there’s multiple variations of the Chapter 13 bankruptcy. There’s a variation where you’re paying the debts back in full, but there’s also a variation where you’re paying a very small percentage of the debts.
To determine which one would be right for you, part of our consultation process is we go through a handful of questions, but one of those goes through both your income and your assets because our goal here is to make sure that you get the benefit of the bankruptcy while also making sure that you don’t lose anything in the process.
Are you struggling financially? Pratt & Maegli Law Firm in Rockford helps Illinois families and individuals explore Chapter 7 and Chapter 13 options with clear answers and a personal approach. Call (815) 315-0683 or visit rockfordbankruptcytoday.com to schedule a confidential consultation and take the first step toward real financial relief.