The Primary Difference Between Chapter 7 and 13 - Bankruptcy

A Chapter 7 is a “liquidation” in which no payments are made to creditors by the Debtor.

Start to finish a no asset case generally lasts about 90 days.

A Debtor can own assets and still file a chapter 7 a/k/a a liquidation bankruptcy without actually losing any of their assets depending on the amount of equity (the amount of value left over after deducting for any security) that is in the asset.

A Chapter 13 is a “restructuring” bankruptcy requiring monthly payment to the Chapter 13 Trustee.

Nothing is liquidated.

Both types of bankruptcy stop foreclosures and any other legal proceeding from continuing, with few exceptions (i.e. criminal matters, divorce proceedings), however on foreclosures, the Chapter 7 automatic stay is brief whereas in the Chapter 13 the automatic stay remains in effect as long as the Debtor stays current with post-petition payments.

There are other exceptions to the rules regarding the automatic stay under BACPA. The filing fees are also different between the two chapters: $299 in a Chapter 7, $274 in a Chapter 13.

Lastly a chapter 13 case can be converted or dismissed by the Debtor but in a chapter 7 the Debtor no longer has control over the direction of the case.

Related Articles:

What qualifies a person for bankruptcy?