The Difference Between Chapter 7 & 13 Bankruptcy

Chicago Bankruptcy Lawyer Explains

At Law Offices of David Freydin, we have a thorough understanding of bankruptcy law. Our highly trained staff will be able to provide you with all of the information you need to make a decision regarding filing for bankruptcy. With our learned advice, we will recommend what type of bankruptcy we feel is appropriate for your financial circumstances. Having an experienced Chicago Bankruptcy attorney at your side will ensure you obtain the results you need from your bankruptcy. Below are some differences between the two most common types of bankruptcy.

Chapter 7 Bankruptcy

If you have overwhelming debt that you find you just cannot pay due to circumstances beyond your control, such as the loss of a job, divorce or unexpected medical bills, then Chapter 7 is possibly the type of bankruptcy you need. If you do not have the means to repay your debt and just don’t see a way out, the bankruptcy laws allow you to file for this type of protection from your creditors. When the bankruptcy is filed, all of your liabilities and assets will be reviewed by the Court and all of your creditors will be notified of the pending bankruptcy.

Most people are allowed to keep their assets, such as a vehicle or a certain amount of money in a bank account. Filing a Chapter 7 bankruptcy is a rather easy procedure, taking only a few months, but your creditors must stop contacting you as soon as your bankruptcy is filed. For complete information on a Chapter 7 bankruptcy filing, contact our experienced and caring legal team for a free consultation.

Chapter 13 Bankruptcy

In a Chapter 13 filing, if you have a steady job or regular source of income such as from a small business or pension, than you may be eligible for this type of a bankruptcy. If you have incurred too much debt and are being harassed by creditors or being threatened with lawsuits or garnishment, this bankruptcy will stop the collection calls and allow you to restructure your debt. As with Chapter 7, your assets and liabilities will be reviewed. However, in a Chapter 13 bankruptcy, your debt will be restructured so you will be able repay it over time.

Main Differences

The main difference between Chapter 7 and Chapter 13 is your ability to repay your debts. To determine this, the court requires us to evaluate your case through a “means test”. Basically, do you have the “means” to repay your debt? If it appears that you have the ability to repay some of your debt, then a Chapter 13 bankruptcy may be more appropriate. At Law Offices of David Freydin, we will carefully review your financial situation with you in order to determine the best course of action for your specific circumstances.

With the various issues that come into play with bankruptcy, we urge you to contact Law Offices of David Freydin to ascertain which type of bankruptcy is best for you. Our free initial consultation will allow you to have your questions answered. Contact a Chicago bankruptcy attorney from Law Offices of David Freydin to discuss your bankruptcy or other legal debt relief options.