St. Louis Bankruptcy Center

 

CHAPTER 7 vs CHAPTER 13 BANKRUPTCY

Chapter 7 vs Chapter 13

Which works best for me?

There are two main ways to file bankruptcy and get debt relief, chapter 7 and chapter 13. Each has its benefits and limitations. Which one you choose or “qualify for” depends on:

  • Your finances
  • Types of debt
  • Income

 

Note: Chapter 11 is similar to Chapter 13 in restructuring debt, but is primarily designed for businesses owned and controlled by more than one person (Example: LLC, partnership, corporation). See  more…  

 Chapter 7Chapter 13
ApproachDebt EliminationDebt Restructuring
SummaryCertain debts can be completely eliminated in 3-5 months. Quickest method.You still make payments to your lenders, but at a much lower and manageable payment schedule that keeps you or your business operating.
Who files?Individuals & Some businessesIndividuals & Sole Proprietor businesses
Creditors
Staying actions
Yes - Immediately put a hold on
most creditors collection activities
Yes - (same)
My AssetsBest for those with few assets.
May need to liquidate some assets.
Keep your home, vehicle, etc
My Bills
Dealing with Debt
Eliminate all unsecured debt
(loans not backed by assets, like credit cards, medical bills, utilities, etc.)
Adjusts debts for lower payments. Affordable payment plans with debts gone in 3-5yrs.
Income NeededBest for those with low incomeBest for those who can pay living expenses but not their current debts.
How long does it take?3-5 months, depending on your situation3-5 year plan to pay off debts
Qualification
Who can file?
Pass the means test. A formula to see if your income is low enough, or if you need to file chapter 13.Must have enough income to meet your new obligations, minus certain expenses.

Want more advice on your specific situation?

Mike can quickly analyze your unique situation and give you the best options to choose from.

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