How Are Chapter 7 and 13 Bankruptcies Similar?

If you are exploring options for bankruptcy, then you may quickly notice that there are stark differences from a Chapter 7 along with a Chapter 13 bankruptcy, since one involves complete relieve your debts, as the other involves a restructuring of your debt payments to be able to suit your obligations in a sustainable way. While there are lots of clear differences between both of these options, there's also a variety of similarities that you can consider when you are trying to choose which bankruptcy is the best for you.

The most essential thing to complete when you're contemplating your options for bankruptcy is to work with an experienced bankruptcy attorney who can make sense of all of the information essential to make this decision. Since you may already realize, the outcomes of each kind of bankruptcy are starkly different and can result in either the removal of most debts, or just pave the way towards a sustainable repayment schedule to be able to satisfy most, or all, of your creditors.

Read more below to discover some of the common overlaps between Chapter 7 and Chapter 13 bankruptcies, although they are certainly both very different.

Both Chapter seven and Chapter 13 bankruptcy Bankruptcies Trigger an Automatic Stay

While Chapter seven eliminates your debts while Chapter 13 bankruptcy restructures them, you'll be able to enjoy something called an “automatic stay” whenever you file either. This stay means that your creditors are unable to contact you about recovering existing debts as the order is within place, and can be penalized through the courts when they violate the stay. In addition, this stay will put a halt to any wage garnishing that you have undergone, meaning that you'll be able to retain all of your earnings during this period.

The period of your automatic stay depends upon a variety of different facets, including whether you have filed for bankruptcy previously, therefore, the number of previous bankruptcies that you have filed for.

Both Bankruptcies Seek Methods to Satisfy Existing Debts

Filing for bankruptcy isn't simply like waving a magic wand and all of your existing debts disappear. Chapter 7, or liquidation, bankruptcy, is usually utilized by someone who does not have the financial way to repay the money they owe, and instead, their assets will be used in to alleviate a minimum of some of the qualifying debt before waiving the total amount. This might include selling off personal property and liquidating assets to repay your creditors.

Chapter 13 is a good option when you're trying to avoid getting your home foreclosed on, a vehicle repossessed, in order to protect any other assets from being auctioned to be able to repay creditors.

Both Options Are Available for Individuals or Businesses

Whether you are an individual or else you are declaring bankruptcy for any business, you'll be able to choose between Chapter 7 and Chapter 13 . Again, the differences between Chapter seven and Chapter 13 bankruptcy are present regardless if you are a person or a business, and therefore you'll be making the decision between liquidating your organization or restructuring business agreements, or liquidating personal assets or restructuring debt payments in order to retain your property.

Of course, these options have significantly spun sentences depending on whether it's applied to an individual or perhaps a business, and you will need to work with your attorney to be able to create a comprehensive understanding of what each filing will entail for you.