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Chapter 13 Bankruptcy vs. Chapter 7 Bankruptcy

chapter-13-vs-chapter-7Chapter 13 Bankruptcy or Chapter 7 Bankruptcy?

If you are in financial trouble and looking into bankruptcy, you may be wondering whether a chapter 13 bankruptcy or a chapter 7 bankruptcy is the best option for you.

Chapter 7 Bankruptcy

In a chapter 7 bankruptcy, a bankruptcy trustee will be assigned to administer the property of your estate. The trustee will liquidate the estate to attempt to obtain the greatest possible recovery for creditors.  If you have equity in your house, then your house will likely be sold through the bankruptcy process.  At the end of the process, the debtor will obtain a discharge as to his or her debt. Please note that not all debt is dischargeable.

Chapter 13 Bankruptcy

In a chapter 13 bankruptcy, a debtor will put forth a plan to make monthly payments towards the debts owed to his or her creditors. The monthly payment will consist of the debtor's disposable income for a period of three to five years. Chapter 13 has been mostly used in the past to protect property, like a house or a car. However, since the changes to the bankruptcy code, debtors who are above the state median income for their household size with primarily consumer debt no longer qualify for a chapter 7 bankruptcy.

Contact a Lawyer For Chapter 13 or Chapter 7 Bankruptcy

If you are considering bankruptcy, contact a lawyer so you can be guided accordingly as to what your options are and what option is best for you. The bankruptcy process can be difficult to navigate, so it is important that you have someone representing you who is familiar with the process to make sure everything goes smoothly.


David E. Sklar

Prior to joining Scura, Wigfield, Heyer, Stevens & Cammarota, LLP, David Sklar graduated from Rutgers University-Newark School of Law with a J.D., Cum Laude. Mr. Sklar was the recipient of a Pro Bono Award and was honored by the New Jersey Bar Association for his commitment to the Street Law Program by being awarded the Street Law Prize.

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