Frequently Asked Questions
Chapter 7 vs. Chapter 13 Bankruptcy
Chapter 7 vs. Chapter 13 bankruptcy: Both Chapter 7 and Chapter 13 bankruptcy can help individuals achieve debt relief, but there are many differences between the two:
Chapter 7 bankruptcy liquidates debt. Debtors are not required to pay back debt as they are in Chapter 13 bankruptcy. Not everyone is eligible for Chapter 7 bankruptcy. A means test is administered to determine if the debtor qualifies. California has exemptions that allow you to keep certain property.
Chapter 13 bankruptcy reorganizes debt. Debtors are required to repay a portion or all of their debts once the debts have been restructured. The repayment plan usually lasts a period of three to five years. Chapter 13 bankruptcy stops foreclosure. Debtors are often able to keep certain assets after filing Chapter 13.
California has exemption laws where you are allowed to exempt certain property and be able to keep the property in Chapter 7 cases. You will not lose any assets or property in Chapter 13. Each State has different exemption laws and limits. Before filing a Chapter 7, we explain to you what exemptions you are entitled to claim. Most chapter 7 cases are considered “no asset” cases, meaning there are no assets at all, or the assets are so insignificant in value to the trustee that they are not worth administering.
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