The difference between Chapter 13 and Chapter 7
The stark difference between Chapter 13 & Chapter 7 creates a wide assortment of options available. Yet unfortunately, these benefits may not be mixed-and matched between chapters, but are available only within each chapter. About one-third of all debtors choose Chapter 13 because payments remain past due on secured debts, or because taxes owed to the IRS are in arrears. A Chapter 13 automatic stay prevents foreclosure, repossession, and seizure by offering debtors the option to include past due payments with the proposed plan, and once the Chapter 13 plan is confirmed, all past due amounts are considered current.
Comparing the difference between Chapter 13 and Chapter 7
|
|
Chapter7 |
Chapter 13 |
Benefits of Chapter 13 |
|
|
Credit Report may show debts repaid? |
no |
yes |
Avoids foreclosure because of past due mortgage payments? |
no |
yes |
Avoids repossession because of past due auto payments? |
no |
yes |
Keep non-exempt property? |
no |
yes |
Restructure past due IRS taxes? |
no |
yes |
"Cram down" amount owed to collateral value? |
no |
yes |
|
|
|
Disadvantages of Chapter 7 |
|
|
Future payments required? |
no |
yes |
Proof of income necessary? |
no |
yes |
Monthly trustee fee? |
no |
yes |
Court supervision of monthly living allowance? |
no |
yes |
In practice - using the difference between Chapter 13 and Chapter 7
All debtors present unique financial histories, asset portfolios, debts owed, and just as importantly, future expectations. Help provided by a qualified consumer bankruptcy lawyers is essential to realize the maximum benefit allowed by the Code. All options may not be available to all debtors because of prior filings, the nature of debts, amounts owed, and other relevant factors.
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