Comparing Chapter 7 and Chapter 13 Bankruptcy Side-by-Side
Many people are hesitant to talk to a bankruptcy lawyer because they don't understand how the process works or which option is best for them. At the Law Offices of Farnsworth Mortensen, PLLC, it won't cost you anything to get your questions answered and learn more about the available paths to financial freedom.
Below is a brief comparison of the major differences between Chapter 7 and Chapter 13 bankruptcy. If you have any questions about additional aspects of either chapter, we invite you to contact one of our attorneys.
| Chapter 7 | Chapter 13 | |
| Qualifying for bankruptcy: | You must pass the bankruptcy means test or your debts must be primarily business related. | You must have less than $360,475 in unsecured debt and less than $1,081,400 in secured debt. Also, you may not file for Chapter 13 if you are a business entity. |
| Length of the bankruptcy proceeding: | Approximately four to six months, in most cases. | Up to five years depending on the length of the repayment plan. |
| How creditors are repaid: | Nonexempt property may be liquidated to raise funds to repay your debts. | You make regular payments under a court approved repayment plan to the bankruptcy trustee. The trustee then distributes the funds to the creditors. |
| Discharge: | You receive your discharge once any available nonexempt assets have been distributed and creditor disputes, if any, have been resolved. | You receive your discharge once you have completed your repayment plan. |
| Bankruptcy protection: | Both chapters provide you with full protection under the automatic stay. Once you have filed for bankruptcy, your creditors are required to stop all collection activity, including phone calls, letters, foreclosures, wage garnishments and lawsuits. | |
Seeking the Best Outcome for You
With offices in Phoenix, Mesa and Tucson, we represent clients throughout Arizona in all types of bankruptcy issues. You can count on us to be honest with you and to provide all of the information you need to make a sound decision about the best debt relief solution for you. Contact our firm today to learn more about our services and how we can help you.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.
