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Chapter 7 and Chapter 13 Bankruptcy


The two main types of consumer bankruptcy filings are Chapter 7 and Chapter 13. Below is  a short summary explaining the differences between each type of filing.

Chapter 7

You must be eligible to file a Chapter 7 case. To determine if you qualify, you must pass the "means test," which is simply a formula the court uses factoring your income and debts. More information on the means test will be provided in future blogs. The law provides numerous exemptions to protect a debtor's assets, so if you have few non-exempt assets, a Chapter 7 is a good option for you.

As soon as you file your Chapter 7 petition, the automatic stay goes into effect and creditors are prohibited from using collection methods against you. When you successfully complete a Chapter 7, the majority of your unsecured debt is discharged or eliminated. This type of case moves fairly quickly, typically lasting 3 to 6 months.

Chapter 13

When you file a Chapter 13 case, it is a debt adjustment and reorganization proceeding.  To be eligible for a Chapter 13 filing, you must have a source of income and debts that are below  a certain level. This type of filing is often chosen by individuals who have an asset they want to keep, like their home. A Chapter 13 debtor's attorney will propose a feasible payment plan to the creditors to be approved by the court.

The repayment plan will schedule payments to your creditors over a period of 3 to 5 years.  You will make your monthly payments to the trustee who distributes the money to the creditors according to the terms of the plan. Once the debtor successfully completes the plan, debts are discharged.

If you are interested in learning more about bankruptcy, contact Levitt & Slafkes, PC to schedule your initial consultation.

For more information regarding the services that we offer, please contact us. We are accessible via e-mail, by filling out the contact form online or by calling 973-323-2953.


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