Chapter 7
- Also known as straight liquidation – the debtor petitions the court to take non-exempt assets (those unprotected by law) and liquidate them to pay off one’s debts.
- If the debt exceeds non-exempt assets, those debts are generally forgiven, and the debtor is basically given a “clean slate.”
- Certain debts cannot be discharged, including but not limited to federal student loans, child support payments, alimony, and more.
- May stay on the client’s credit record anywhere from seven to ten years from the filing date.
Chapter 13
- Debts are typically restructured by the courts.
- A repayment schedule will be determined by the filer’s income and expenses.
- Repayment plans typically can stretch from three to five years and are structured so that between 10 percent and 99 percent of the debt is repaid.
- Under a Chapter 13 filing, assets are not liquidated to repay debt.
- Will stay on the client’s credit record for seven years from the filing date.
