The Differences Between Filing Chapter 7 Bankruptcy Vs. Chapter 13 Bankruptcy

Filing for bankruptcy isn’t an easy decision, and the process can be overwhelming. Working with an experienced and caring bankruptcy attorney is the best way for a person to learn about their options, as it is vital to know what type of bankruptcy is best in a particular situation.

Berggren Law Offices, PLLC, a law firm in Raleigh, NC, recently spoke about the different types of bankruptcy a person can file for. Though it is crucial a person use a qualified attorney, it is important to know the different types of bankruptcy and their implications. The two main types of bankruptcy individuals file for are chapter 7 and chapter 13.

The bankruptcy lawyer that one works with should provide a detailed explanation of the available types of bankruptcy and help guide a person in selecting which bankruptcy chapter is appropriate in each person’s unique situation.  Different bankruptcy filing types apply to different people. 

The most common bankruptcy type people file for is chapter 7 bankruptcy.   In chapter 7, a person typically discharges most of their unsecured debts in a period of 3 to 4 months while keeping their exempt property.  They will typically continue paying their secured debt such a mortgage or car loan (if they desire to keep their house and car).   Chapter 7 is available to available to the following: 

  1. Individuals, Married Couples, Partnerships, and Corporations.
  2. Individuals whose debts are primarily business debts.
  3. Individuals whose debts are primarily consumer debts that “pass” the means test.

Chapter 13 bankruptcy, on the other hand, is commonly filed by people who are delinquent on their mortgage or car loans and are facing foreclosure or repossession.  The filing of the bankruptcy stops the foreclosure or repossession and allows them to catch up the past due payments over a period of 3 to 5 years.  Many chapter 13 bankruptcies do not require any distribution to unsecured creditors.  Chapter 13 can eliminate or minimize tax responsibilities, lower automobile payments, and even eliminate second and third mortgages in certain instances. Legal fees can also be spread out and paid during the length of the chapter 13 payment period. The following people can file for chapter 13 bankruptcy:

  1. Individuals including sole proprietorship, but not an incorporated business.
  2. The Individuals or sole proprietorships must have secured debts of less than $1,257,850 and unsecured debts of less than $419,275.

About Berggren Law Offices, PLLC

William G. Berggren’s experience includes work on some of the most complex corporate bankruptcies for some of the largest bankruptcy filings in the country to the simplest individual filings. Berggren Law Offices, PLLC offers free consultations to learn more about filing for bankruptcy and has over 30 years of experience in providing their clients with effective legal representation.

Berggren Law Offices, PLLC
4000 Blue Ridge Road, Suite #150
Raleigh, NC 27612


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