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California Lawyer
California Lawyer, Attorney
Category: Bankruptcy Law
Satisfied Customers: 970
Experience:  Licensed to practice law in California
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Could you explain to me simple way on the difference from

Customer Question

Could you explain to me simple way on the difference from Chapter 7 and 13. I lost my job since March this year with only one income from my husband. after paying the house I don't have any to pay for the credit cards.
JA: What state are you in? And has anything been officially filed?
Customer: Ga. not yet.
JA: Has anything been filed in civil court? If so, what?
Customer: I have not do anything yet. not sure where to go and how yet.
JA: Anything else you want the lawyer to know before I connect you?
Customer: I just need to know the difference from those 2.
Submitted: 1 month ago.
Category: Bankruptcy Law
Expert:  California Lawyer replied 1 month ago.

Hello,

I will try and help.

Chapter 7 is a liquidation bankruptcy designed to wipe out your general unsecured debts such as credit cards and medical bills. To qualify for Chapter 7 bankruptcy, you must have little or no disposable income. If you make too much money, you may be required to file a Chapter 13 bankruptcy (discussed below).

When you file for Chapter 7 bankruptcy, a trustee is appointed to administer your case. In addition to reviewing your bankruptcy papers and supporting documents, the Chapter 7 trustee’s job is to sell your nonexempt property to pay back your creditors. If you don’t have any nonexempt assets, your creditors receive nothing. As a result, Chapter 7 bankruptcy is typically for low income debtors with little or no assets who want to get rid of their unsecured debts.

Chapter 13 is a reorganization bankruptcy designed for debtors with regular income who can pay back at least a portion of their debts through a repayment plan. If you make too much money to qualify for Chapter 7 bankruptcy, you may have no choice but to file a Chapter 13 case. However, many debtors choose to file for Chapter 13 bankruptcy because it offers many benefits that Chapter 7 bankruptcy does not (such as the ability to catch up on missed mortgage payments or strip wholly unsecured junior liens from your house). In Chapter 13 bankruptcy, you get to keep all of your property (including nonexempt assets). In exchange, you pay back all or a portion of your debts through a repayment plan (the amount you must pay back depends on your income, expenses, and types of debt). For this reason, Chapter 13 is commonly referred to as a reorganization bankruptcy. Typically, Chapter 13 bankruptcy is for debtors who can afford to make monthly payments to get caught up on missed mortgage or car payments or pay off non-dischargeable debts such as alimony or child support arrears.

I hope this helps.

DCG