Chapter 7 vs Chapter 13 Bankruptcy
A few price inflations, rising costs of keeping properties and several successful bankruptcy petitions later, the residents of Chicago see bankruptcy in a new light. Many people have come to realize that filing bankruptcy in Chicago can be the solution to an impending financial ruin. Additionally, this solution is legally yours. There's now a conscious effort to learn more about bankruptcy.
So here's some more information on bankruptcy, specifically on Chapter 7 and Chapter 13 Chicago bankruptcy code. A bankruptcy petition is commonly filed under either of the two chapters. Your attorney is more qualified to discuss this to you but below is a summary of the major differences between the two:
Chapter 7 vs Chapter 13 Bankruptcy
1. Liquidation vs Payment Plan
The final outcome for both is repaying outstanding debts. Chapter 7 dictates that your assets will be sold for cash and the cash used to pay creditors. This process is referred to as liquidation. With Chapter 13, your debts will be restructured and will be paid without interest in the period of 3 to 5 years
2. Financial Stability
Qualifying for either chapter of bankruptcy requires an assessment of your capacity to pay your financial obligations. With Chapter 7 Chicago law requires a means test to compare your income and liabilities. You qualify for Chapter 13 when there is proof that you have adequate income coming in to follow the debt repayment plan in the few years to come.
3. Credit effects
Filing Chapter 7 bankruptcy will be reflected on your credit standing for the next 7 to 10 years. Whereas Chapter 13 will stay on your record for 2 years or less.
Getting the advice of a lawyer requires only a few minutes of your time, no other expense or obligation on your part. In fact, qualified legal advice is just a phone call away.
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