The difference between a Chapter 7 bankruptcy and a Chapter 13 bankruptcy are fairly substantial. A Chapter 7 bankruptcy is a complete liquidation of your assets. As soon as you file the bankruptcy petition, your assets are the property of the U.S. Trustees Office. You’re allowed a certain amount of money in exceptions and anything other than that is liquidated. In return for liquidating whatever you have, which may be very little, you get a discharge of your debt, generally your unsecured debt.
Chapter 13 is for those who have maybe a little bit more assets, make a little bit more money and have a way of repaying their debt. So, Chapter 13 is a reorganization plan whereby you make monthly payments to the Trustee’s Office either in a three-year plan or a five-year plan to pay off your creditors on a pro-rata basis.
Law Office of Ray Garcia, P.A.
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Latest posts by Law Office of Ray Garcia, P.A. (see all)
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