Chapter 7 bankruptcy is a legal process that allows individuals to discharge their debts and gain a financial fresh start. It is the most common type of bankruptcy filing and is available to individuals, married couples, corporations, and partnerships. In a Chapter 7 bankruptcy, the debtor’s assets are liquidated and used to pay creditors. The debtor is then released from most of their debts and can begin to rebuild their financial life.
Chapter 13 bankruptcy is a legal process that allows individuals to reorganize their debt and create a payment plan with their creditors. It is available to individuals, married couples, corporations, and partnerships. In a Chapter 13 bankruptcy, the debtor is allowed to keep their assets and create a payment plan with their creditors. The goal is to pay off the debt over a 3-5 year period and the debtor must adhere to the payment plan. After the payment plan is completed, the debtor is released from the remaining debt.
