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Unless you have filed for bankruptcy previously or are an experienced bankruptcy attorney, you probably have many questions about the differences between Chapter 7, Chapter 11, and Chapter 13 bankruptcies, whether one would be right for your situation.

Chapter 7 Bankruptcy

If your income is low enough for you to qualify for Chapter 7 (see our recent blog, ‘Bankruptcy: What is the Means Test–And What if I Don’t Pass?), you can look forward to quick relief from your debts. Also referred to as the liquidation bankruptcy, Chapter 7 allows for a discharge of most debts within three to six months. There are some debts which cannot be discharged, such as family support, some tax debts, or any penalties for criminal actions.

Chapter 11 Bankruptcy

The Chapter 11 bankruptcy is famously known as the business bankruptcy, allowing corporations, and in certain cases individuals, time to reorganize their debts, while having the option to keep their doors open at the same time. Considered a ‘debtor in possession,’ the business must put together a repayment plan which is then voted upon by the creditors and company stockholders. While some businesses may file for Chapter 11 and then never be seen or heard from again, others really do use that time to re-strengthen and continue successfully later.

Chapter 13 Bankruptcy

Chapter 13 is a bit more complicated in terms of the personal bankruptcy, but if you are not eligible for Chapter 7 and want to keep all your property, this is a good financial tool for wiping the slate clean-after three to five years. It is known as an income-based bankruptcy where debts are discharged at the end. Both unsecured debts such as credit cards, and secured debts such as mortgages or car loans can all be included in Chapter 13. If your home is in threat of foreclosure, this bankruptcy chapter may allow you to save it by rolling the delinquent payments into the plan; however, monthly mortgage payments must be kept current. This is the same for a car that may have been in danger of repossession-and you may even be able to negotiate better terms with the lender. In Chapter 13, you may also roll delinquent family support payments into the plan.

Other Bankruptcy Chapters

Chapter 9 – this chapter is meant for municipalities ready to file for bankruptcy.

Chapter 12 – this is a bankruptcy designed for farmers and commercial fisherman who need to reorganize their finances.

Chapter 15 – this bankruptcy deals with jurisdiction, and is usually associated with foreign entities filing for bankruptcy.

Contact Us for Help

Because Levitt & Slafkes, P.C. has already helped thousands of clients through the bankruptcy process, we understand exactly what you are going through, and we are here to answer all your questions. Call us at 973-323-2953, or contact us online to schedule a free consultation.

We are proudly designated as a debt relief agency by an act of Congress.