BANKRUPTCYLEGAL SERVICES
Steve Sessions - Attorney at Law
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(505) 248-1111
Bankruptcy

Chapter 7 vs. Chapter 13

Liquidation vs. Individual Debt Adjustment
Chapter 7
“Fresh Start” or “Liquidation”
Chapter 7 bankruptcy is commonly used as a remedy when: You have regular property, a house, cars, retirement accounts and basic necessities like furniture and clothing. You have little or no money left after paying basic expenses each month—or you're not even meeting basic expenses. The ordinary property that most people own is exempt, that is protected in a Chapter 7 bankruptcy from your creditors.
Advantages of Chapter 7 
Most unsecured debts can be discharged (completely eliminated) The process moves quickly—you may receive your discharge in just a few months. Creditors can't contact you while the automatic stay is in effect—or after debts are discharged.
Debtors who have qualified under the 'means test' and completed a required pre-filing session with a credit counselor may file for Chapter 7 bankruptcy protection.
Chapter 7 is a legal process designed to quickly (usually within a few months) eliminate unsecured debt, including:
Most unsecured debts can be discharged (completely eliminated) The process moves quickly—you may receive your discharge in just a few months. Creditors can't contact you while the automatic stay is in effect—or after debts are discharged.
  • Credit Cards
  • Department Store Cards
  • Medical Bills
  • Payday Loans
  • Some Personal Loans
  • Parking Bills
  • Utility Bills, and more

Chapter 7 filers often are unemployed or work jobs that leave them with little money to pay their bills each month. The Chapter 7 process is often complete in only a few months.

Chapter 7 will stop garnishments.
Chapter 13
“Adjustment of Debts for Individuals with Regular Income” or “Reorganization”
Chapter 13 bankruptcy is commonly used as a remedy when: You have significant equity in a home or other property and you want to keep it. You have regular income and can pay your living expenses, but you can't keep up the scheduled payments on your debts.

Chapter 13 was designed to stop to foreclosure, repossession, wage garnishments, lawsuits and creditor harassment.

A Chapter 13 bankruptcy allows a filer to consolidate, prioritize, repay, and, in some cases, reduce or eliminate old debt while receiving the powerful protection against creditors.

Instead of dealing with multiple creditors and bills, Chapter 13 creates a single repayment plan that is managed by the court.
Advantages of Chapter 13
You can keep most of your property while spreading out time to pay past due accounts

You'll have 3-5 years to catch up delinquent accounts according to a schedule that you and the bankruptcy trustee have agreed is workable for you. You'll make one monthly payment to the bankruptcy trustee for distribution—you'll have no direct contact with creditors during the protection period of 3-5 years. Co-signers may be protected.
Who may file a Chapter 13?
- Any individual debtor whose unsecured debts are below $360,475 and whose secured debts are less than $1,081,400 may file.

For further questions... 
call (505) 248-1111.
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