The differences between Chapter 7 and Chapter 13 bankruptcy

On Behalf of | May 21, 2020 | Uncategorized

There are some key differences between Chapter 7 and Chapter 13 bankruptcy. Knowing the differences will help you determine which bankruptcy type is best for your situation. 

We understand the bankruptcy laws in Florida and have helped many of our clients file their claims. 

Chapter 7 bankruptcy 

As found on, Chapter 7 bankruptcy will release you from the obligation of paying your debts to your creditors, also known as discharging your debts. It is important to understand, however, that you must sell your assets first and pay your debtors what you are able. Certain assets, such as your homestead, are exempt and you will not have to sell them. A trustee will be in charge of gathering your assets and selling them. Any debt leftover that is dischargeable is forgiven. Nondischargable debt includes things such as student loans or taxes. 

Chapter 13 bankruptcy 

Chapter 13 bankruptcy works a little bit different because it involves the restructuring of your debt and does not involve a discharge like in a Chapter 7 bankruptcy. During Chapter 13, you will come up with a plan to repay your debts within three to five years. One of the advantages of Chapter 13 is that you may reduce the amount of overall debt that you have to pay. However, Chapter 13 can require you to pay 100% of your income to repay your debts, if necessary. 

Instead of paying your creditors separately, you will make monthly payments to a court-appointed trustee. This trustee is impartial and has no direct contact with your creditors other than distributing your monthly payments to them. More information about this topic is available on our webpage.