CHAPTER 7 & 13 BANKRUPTCY

WHAT IS THE DIFFERENCE BETWEEN CHAPTER 7 BANKRUPTCY AND CHAPTER 13 BANKRUPTCY?

Chapter 7 currently is designed to permit a person filing for bankruptcy (a debtor) to wipe out (discharge) many types of debt without further payments on unsecured debts. Chapter 13 requires debtors to make payments over the course of at least 36 months. A debtor files a petition to begin either process. Upon filing the petition an immediate order is put in place that prohibits creditors from taking any action to collect a debt (automatic stay) without getting prior permission of the bankruptcy court. The petition must list all creditors, all assets, and include a complete and accurate monthly budget and answer many standard questions set forth in the statement of financial affairs that is included in every petition.