What’s the Difference?

There are differences between a Chapter 7 bankruptcy (“liquidation” or “straight bankruptcy”) and a Chapter 13 bankruptcy (the “wage earner’s bankruptcy”).  While a Chapter 7 bankruptcy is intended for those who truly cannot repair their debts, a Chapter 13 bankruptcy is essentially a debt consolidation plan that involves a monthly payment to a court-appointed trustee, who distributes the money to creditors.  While a Chapter 7 bankruptcy only takes 4 to 6 months to complete, a Chapter 13 bankruptcy can take up to 5 years.  A Chapter 13 bankruptcy also allows debtors to keep their assets, while a Chapter 7 bankruptcy involves liquidating all non-exempt assets.

The Chapter 13 plan is crafted by you, the debtor, and is based upon what you can afford.  Your creditors are forced to accept.  At Keith, Winters & Wenning, we work closely with each individual to devise a Chapter 13 plan reorganization that makes sense and which is designed to succeed.

HINT: For those in danger of foreclosure, a Chapter 13 repayment plan helps to make up the payments and save the home.