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  • There are two primary types of personal bankruptcy: Chapter 13 and Chapter 7. Each must be filed in federal bankruptcy court. As of 2000, the fees for seeking bankruptcy relief are $160: a filing fee of $130 and an administrative fee of $30. Attorney fees are additional.
  • Chapter 13 allows persons with a steady income to keep property, like a mortgaged house or a car, that they otherwise might lose. In Chapter 13, the court approves a repayment plan that allows you to use your future income to pay off a default during a three-to-five-year period, rather than surrender any property. After you have made all payments under the plan, you receive a discharge of your debts.
  • Known as straight bankruptcy, Chapter 7 involves liquidation of all assets that are not exempt. Exempt property may include automobiles, work-related tools and basic household furnishings. Some of your property may be sold by a court-appointed official � a trustee � or turned over to your creditors. You can receive a discharge of your debts through Chapter 7 only once every six years.
  • The best books on self-filing are listed under the related links.
  • You can and should do the research on filing your own Chapter 7 before the present congress steals it out from under you. These books are also available at most public libraries, and Chapter 7 courts are very friendly to self-filed cases...for now.
  • The filing fee for Chapter 7 is now $209, and the filing fee for Chapter 13 is $194 (as of today's date, 4/4/05).
  • The most striking difference is that a Chapter 7 lasts about 3 1/2 months, during which time you make no payments to the Court (and to qualify for Chapter 7 you must show that you have no money left over each month to make payments), whereas a Chapter 13 lasts from 3 to 5 years, and during that time you make monthly payments to the Court (because you have more income than expenses). This simplistic explanation makes it sound like everyone would want to file Chapter 7 instead of Chapter 13, but this isn't true; Chapter 13 has several complex advantages over Chapter 7, such as you can structure your Chapter 13 to let you keep property that the Court would sell in a Chapter 7, and you can get rid of certain types of debts that cannot be discharged by a Chapter 7, to name a couple. But, as of today's date (4/4/05), the U.S. House of Representatives is considering new bankruptcy reform legislation (already passed in the Senate), which if they pass it, will go to the President for approval. If it ultimately becomes law, the differences between Chapter 7 and Chapter 13 will change. Please note that nothing in this posting or in any other posting constitutes legal advice; this is simply my understanding of the facts, which I do not warrant, and I am not suggesting any course of action or inaction to any person.
  • A chapter 7 is total liquidation of nonexempt assets. A Chapter 13 is a "debt consolidation", in which the debtor does not relinquish any property but is required to make a specified monthly payment to the trustee. The trustee will then pay the creditors according to priority. A 13 is generally 3-5 years. The basic rule is the creditors must receive a like amount as they would have if the debtor filed a 7. Secured and unsecured debts are treated differently in each bankruptcy.
  • The short version, a chapter seven is a full liquidation bankruptcy in which the petitioner relinquishes all nonexempt property to be sold to pay creditors. This generally does not include the primary residence and one vehicle, it depends on individual circumstances. A chapter 13 is a consolidation bankruptcy in which the petitioner agrees to a payment plan which will be overseen by the assigned trustee. The petitioner keeps all their property but must repay within 3-5 years at least the same amount the creditors would have received under a chapter 7.
  • Chapter 7 bankruptcy is essentially a liquidation. In a Chapter 7, your assets may be recovered to pay off some of your debt (car, furniture, home, etc, depending on state laws) A Chapter 13 bankruptcy is a consolidation. The court decides how much you can afford to pay back and you will be set up on a payment plan for several years (up to 5, I believe). The con of a Chapter 13 bankruptcy is that it is a long process. The pro is that you get to retain all of your assets.
  • A Chapter 7 is a total liquidation. If you are qualified, depending on your assets and your state's exemptions, it may be potential to wipe out your unsecured debts (credit cards, medical bills, etc.) with little or no other troubles. If you have secured debts (mortgage, car payments, etc.) you would either have to agree to continue to pay these or allow the lenders to retake the collateral. Current law requires an income Means Test, whereby your total household income is determined, and then compared to the median for your state and household size. If you fall at or below the median you can file Chapter 7, if not you can only file Chapter 13. Chapter 13 is a repayment plan. If your income is below the median, you can file a 3 year plan - all your income except for acceptable deductions for living expenses goes int the Chapter 13 plan which goes to your creditors. If the court has confirmed the plan, the creditors must accept that, even if they get much less than full payment. At the end of the plan, your unsecured debts are discharged.
  • If you are above the median income test, you can only suggest a 5 year plan.
  • Chapter 7 will do not anything to save your home from foreclosure by a first mortgage holder. A Chapter 13 plan can stop foreclosure.
  • Chapter 7 is a complete debt wipe-out. All debts that are eligible under bankruptcy laws (Child support & student loans are some debts that BK CANNOT wipe out) are wiped out and you will no longer be obligated to pay anything back.
  • A Chapter 13 is not a complete debt wipe-out. You negotiate with each creditor to change the terms of the debt so you can repay them (i.e. cancel all interest, settle for a percentage of the principal balance, etc.). One you have established your repayment plan to each debtor, the BK will not be discharged until you pay back what you agrees to. In other words, you will still have to pay back each creditor, but not the full amount due.
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Related Questions

Could you change your chapter 7 to chapter 13 after being discharged?

Sometimes Chapter 13 debtors need or want to convert their bankruptcy case from a Chapter 13 to a Chapter 7 bankruptcy. And sometimes the bankruptcy court will force you to convert from Chapter 13 to Chapter 7 - this is often called a "forced conversion." The reasons for conversions vary. For the most part, if you are instigating the conversion, you have a right to convert your case. But that doesn't always mean you'll qualify for Chapter 7 relief.


You are currently in a chap 13 bankruptcy can I change to a chap 7 bankruptcy?

You cannot change my bankruptcy, but you can convert your Chapter 13 to a Chapter 7. It happens frequently. You may want to check with your lawyer or an experienced lawyer since it can have unintended consequences.


What happens if you are in bankruptcy and then become unemployed?

If you are in a chapter 13, if you are no longer able to make plan payments, you must either convert to a chapter 7 or dismiss the 13.


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

Yes.


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.


How do I convert chapter 13 bankruptcy to chapter 7 myself What should be included in the motion to convert letter?

The debtor (or the debtor's attorney) can do this with a simple filing - usually an "Ex Parte Motion to Convert Chapter 13 to a Chapter 7." Providing the debtor's bankruptcy has not previously been converted already, the debtor/debtor attorney can do this without the permission or advance permission of either the bankruptcy judge or the Chapter 13 trustee that is managing the bankruptcy up until that point (hence, the "Ex Parte" part of the document). There are notice requirements - check with your local bankruptcy district to see who this needs to be mailed out to. Also, there is usually a small fee involved (it usually involves the debtor paying the difference in cost between a Chapter 13 and a Chapter 7 filing, but may be different - again, check with your local bankruptcy court). The debtor will be required to go through another 341 creditor's meeting with the new Chapter 7 trustee.


In Kentucky How long after bankruptcy can you file chapter 7 and can you file chapter 13 after chapter 7?

You can file bankruptcy again 7 years after the last time you filed.


Can you switch a Chapter 13 Bankruptcy to a Chapter 7?

As long as your Lawyer says.


Does a chapter 7 bankruptcy affect your credit the same as a chapter 13?

Yes.


Can you file 7 Bankruptcy then 13 Bankruptcy?

Yes, that is what we call a chapter 20 bankruptcy, but they are very complex.


Can you file a chapter 7 after a chapter 13?

Believe it or not, the ploy is called a Chapter 20! A so-called "Chapter 20" bankruptcy is the process filing of a "Chapter 7" bankruptcy to discharge unsecured debts, followed by a "Chapter 13" bankruptcy to allow the debtor to catch up on mortgage payments. The 2005 Bankruptcy Reform Act attempts to limit "Chapter 20" bankruptcies by imposing limits on the filing of successive bankruptcies. Under current bankrupcy law a Chapter 13 bankruptcy may be filed only once every two years, and three years must pass after the filing of a Chapter 7 bankruptcy before a Chapter 13 filing. Some debtors attempt to circumvent this restriction by filing for Chapter 13 protection while the Chapter 7 petition is still pending. That option is not available in all courts. In a "Chapter 20" bankruptcy, debtors should be aware that missing even one mortgage payment after filing the initial "Chapter 7" petition may cost them their ability to save their home in a subsequent "Chapter 13" filing.


How is your credit affected by a chapter 13 bankruptcy verses a chapter 7 bankruptcy?

Both have the same negative impact on your credit.