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Photo of the legal professional at Corona Law Firm P.A.
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Chapter 7 vs Chapter 13 bankruptcy

On Behalf of | Sep 25, 2022 | Personal Bankruptcy

Many people shudder at the term bankruptcy, but you shouldn’t. Bankruptcy allows people to rid themselves of debt that might be impeding their lives. With one quick finger snap (and some paperwork) you could be lifting a heavy weight off your shoulders after getting to know bankruptcy better.

There are two common types of bankruptcy: Chapter 7 and Chapter 13. Both types of bankruptcy have their advantages and disadvantages. Here’s what you should know:

Filing a Chapter 7 bankruptcy 

Chapter 7 is typically the most common type of bankruptcy people file. Chapter 7 bankruptcy often clears out a large amount of personal, medical or credit card debt (however, it doesn’t discharge student loans, tax, alimony or child support).

Chapter 7 bankruptcy is also known as liquidation bankruptcy. This is because Chapter 7 may liquidate assets to pay off a portion of your debt. You should know, however, not all your assets are eligible for liquidation.

Filing a Chapter 13 bankruptcy

Alternatively, you have the option of choosing a Chapter 13 bankruptcy. Unlike Chapter 7, Chapter 13 bankruptcy allows you to keep many of your assets. 

Chapter 13 is a refinance plan for your debt. In other words, your debt will still need to be paid off, but you’ll have an easier time paying off part or all of it. 

If you’re planning on filing for bankruptcy, you should probably reach out for legal help.