2 Types of Bankruptcy

///2 Types of Bankruptcy
2 Types of Bankruptcy 2017-10-01T17:13:31+00:00

Which Bankruptcy: Chapter 7 vs. Chapter 13

Madison Wisconsin Bankruptcy Lawyer, Attorney Steven Zaleski can determine which option is right for you.

The types of bankruptcy are named for their respective chapters in the United States Bankruptcy Code. The type of bankruptcy that you file depends on several factors, including your income, assest, household size, and debt.

A Chapter 7 bankruptcy is the quickest way for people to get out of debt and get a fresh start in as few as 120 days. For those who do not qualify for a Chapter 7, a Chapter 13 repayment plan is the best option. The Chapter 13 plan will not take any longer to file, but this option also includes a repayment plan, and those payments last between 36 and 60 months.

Here is an overview of the two types, but you may also want to check out ourFrequently Asked Questions for more information.

 

Chapter 7

A Chapter 7 Bankruptcy does not involve a repayment plan. A Chapter 7 “discharges” the debts upon completion of the case. The term “discharge” is the legal term for what most people call having the debt “wiped out” or “eliminated.” Income generated after the bankruptcy filing is not a part of the bankruptcy — the debtor can keep it.

It takes approximately 120 days for a Chapter 7 case to go through the bankruptcy court system.

 

Chapter 13

A Chapter 13 Bankruptcy is a type of repayment plan or financial reorganization where a person continues to function, maintains ownership of all assets, and tries to work out a reorganization plan to pay off creditors. The debtor repays a portion of debts over a designated time period, usually 36 to 60 months. Some portion of the debt may be discharged, depending on the income of the debtor. There are also limits on the amount of debt involved.