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Clearly, you should consult an attorney to get more details, but this will cover the basics for you, for your information and education only. Please consult your attorney. That being said...


In general, a chpt 7 is used for eliminating your unsecured debt (credit cards, unpaid medical bills, etc). You will not pay your secured debt (house, car, boat, etc) through the bankruptcy. You will have a few options as to how to handle these secured debts. They are surrender, reaffirmation, and redemption.

Surrender is just that, you give up the property, and once discharged you are no longer liable for that debt. The creditor may not take up collection actions against you.

Reaffirmation is where you attest that you intent to keep the property, and will

continue to be responsible for it. Once the case is discharged, you will still be help liable for the debt, and if the vehicle is repo'd and sold, you are still responsible for any deficiency balance.

Redemption is a court-sanctioned cash settlement option, normally an appropriate number to offer is the NADA or KBB value of the car. There are companies out there who are in the business of refinancing BK redemptions.

Before 10/17/2005 (the date the new Bankruptcy reform act went into effect, there was an option of retain current in which you intend to keep the car, but if you default an any point in the future and the car is repo'd and sold, you are NOT help responsible for the debt. This is no longer a legal option, but many people still list this intention. Since this is not an acceptable intention, the stay will lift during the bankruptcy, allowing the creditor to take possession of the car if they choose to do so (default in payments).

Once you are discharged from the case, you are done; normally takes 4-6 months.


In general, a chpt 13 is used to help protect your property from repossession or foreclosure. Normally, a 'dividend to unsecured creditors' will be determined, which can be anywhere between 0% and 100%, depending on your discretionary income after living expenses are accounted for.

Regarding secured claims, there are options on how you pay those debts through the chpt 13, surrender, direct pay, or trustee pay.

Once again, surrender is where you would give up your car in the BK, and upon discharge, you are not responsible for the debt and no collection actions may be taken against you.

Direct pay is where you would continue to pay the debt directly to the creditor, generally in the same way you paid before. If you become delinquent, the creditor must get court order to repossess the car.

Trustee pay is when you pay your BK payment, and out of these funds, the trustee sends the court ordered payment to the creditor. Now, normally, if your car was bought less 910 days before the BK was filed, you must use the full balance owed as the secured amount, although a reduced interest rate may normally be allowed. If, on the other hand, more than 910 days have elapsed since you bought your car, you may use the retail value of the car as the secured amount, and any overage in the debt (if you owe more than the car's value') is treated as if it were an unsecured credit card debt.

Generally, the court will allow time for the trustee and creditors to review and object to your chpt 13 plan, then if there are no objections, the plan is confirmed. This normally takes roughly 6 months, maybe more or less. After confirmation, you make your trustee payments for anywhere from 36 to 60 months, during which time you pay the trustee your BK payment, or it's taken from your paycheck, and the creditors receive payments from the trustee.

After you have completed your payments, the court discharges you from any further responsibilities in the BK.

There are many finer points, so please check with an attorney.

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โˆ™ 2011-10-16 21:50:39
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Q: What is the difference between chapter 7 and chapter 13 bankruptcy?
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Related questions

What is chapter 13 bankrupt?

There is a big difference between chapter 7 and chapter 13 bankruptcy. Generally speaking, chapter 13 bankruptcy is a type of Reorganization bankruptcy. It filing a plan with the bankruptcy court suggesting how you will repay your debt. Some debts must be repaid in full while others require only a percentage or nothing at all.

What is difference between chapter 7 and chapter 13?

Chapter 7 is debt elimination and is the more severe form of bankruptcy. Chapter 13 is where a repayment schedule is drawn up and you still payoff your debts.

What is the bankruptcy differences?

The difference between the types of bankruptcies have mainly to do with whether the filing is for an individual or a business. There are two types of bankruptcy for individuals. Those are Chapter 7-by far the most commonly filed form of bankruptcy and Chapter 13-which is more of a debt consolidation type of bankruptcy. Both have various positives and negatives. The article below goes into the specifics of Chapter 7 vs Chapter 13.

What is the difference between chapter 11 chapter 13 and chapter7?

Chapter 7 bankruptcy is the most popular and common type of personal bankruptcy.Chapter 13 bankruptcy is the king for protection of real estate and other secured property.Chapter 11 is mostly used by the business who needs to restructure the debts.

What is the difference between a chapter 13 and a chapter 11 bankruptcy?

To somewhat oversimplify: Chapter 11 is "reorganization" for Corporations or a business, & Chapter 13 is a very similar thing for people. Debts and life are paid off/down and things re-organized. Chapter 7 is flat-out, busted-broke bankruptcy - out of business, not a penny left.

How long does it take after a bankruptcy is discharged to show on your credit report?

The amount of time a bankruptcy stays on your credit report after discharge differs between Chapter 7 and Chapter 13 Bankruptcy. With Chapter 7 bankruptcy, the Chapter 7 stays on your credit report for 10 years. Chapter 13 bankruptcy, after discharge, it shows for 7 years on your credit report.

Chap 13 and chap 7 bankruptcy?

There is a big difference between these two. Chapter 7 is known as a debt liquidation bankruptcy whereas chapter 13 is debt restructuring. Chapter 7 involves getting the majority of your debts discharged (although not all are an option) and chapter 13 reorganizes your debts and the court sets up a payment plan.

Can an individual dismissed from Chapter 13 bankruptcy refile for bankruptcy?

You can file a Chapter 7 bankruptcy.

What difference between ch 7 and ch 13 bankruptcies?

Chapter 7 is a complete discharge of all dischargeable debts. Chapter 13 is a repayment plan of the debts under the bankruptcy court's supervision and protection.

What is the different between a chapter 7 and chapter 13 bankruptcy?

In Chapter 7 bankruptcy, you ask the bankruptcy court to discharge most of the debts you owe. In exchange for this discharge, the bankruptcy trustee can take any property you own that is not exempt from collection.

If you default on a chapter 13 bankruptcy can you file for a chapter 7?

An unfortunate aspect of Chapter 13 bankruptcy plans is that the budget is very strict and hard to keep. An individual having problems with the chapter 13 bankruptcy can convert into a chapter 7 bankruptcy or re-file altogether. Make sure to look into the changes and different effects that a chapter 7 (as compared to Chapter 13) will have on you.

How soon can you file bankruptcy after a voluntary dismissal of a chapter 13?

is it safe to file for voluntary dismissal of chapter 13 bankruptcy

How to file a chapter 13 bankruptcy?

contact a bankruptcy lawyer

What does Chapter 13 bankruptcy law do?

The Chapter 13 bankruptcy law allows a debtor to keep their property and pay their debt over time, usually over a period of between three to five years.

If you filed chapter 13 bankruptcy and it was discharged can you file chapter 7 bankruptcy now?


Can you get your car back after a repossession if you file chapter 13 bankruptcy?

In GA Can you get your car back after a repossession if you file chapter 13 bankruptcy

Can you change your bankruptcy filing from Chapter 13 to Chapter 7?

can you change your filing from chapter 7 to chapter 13 ?

Compare and contrast Chapter 7 and Chapter 13 bankruptcy?

Chapter 7 Bankruptcy is when a consumer or business asks the court to discharge the debts owed (some debts cannot be discharged). In exchange, the business's assets or the consumer's property is sold (liquidated) and the proceeds are used to pay off the creditors. Chapter 13 bankruptcy, or Reorganization bankruptcy involves filing a plan with the bankruptcy court suggesting how you will repay your debt. Some debts must be repaid in full while others require only a percentage or nothing at all. The main difference between the two is that chapter 7 discharges most debts while chapter 13 is a type of repayment plan.

What happens if you wreck your car after filing for Chapter 13 bankruptcy?

If you wreck your car after filing for Chapter 13 bankruptcy you can file it on your insurance. You can then replace your car based on the bankruptcy order.

Chapter 13 bankruptcy be dissimisal?

You can get a Chapter 13 bankruptcy dismissal by asking your lawyer to ask the trustee for a dismissal. If you are having trouble making the payments, you can ask for you bankruptcy to be modified.

What is a chapter 13 lawyer good at?

A chapter 13 lawyer is good at filing for bankruptcy for their client. A bankruptcy lawyer can help you find the best financial path after filing for bankruptcy.

Can you file chapter 7 bankruptcy before a chapter 13 has been dismissed?

No. You can only have one bankruptcy proceeding at a time. You can convert the 13 to a 7.

If you voluntarily have a chapter 13 bankruptcy dismissed will your creditors be notified of the dismissal?

Yes. If you voluntarily have a chapter 13 bankruptcy dismissed, your creditors will be notified of the dismissal.

If you file Chapter 7 or Chapter 13 bankruptcy can they take your IRA?


Can you be sued after your chapter 13 is successfully discharged?

Not by creditors who agreed to participate in the chapter 13 bankruptcy.