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One of the most common email requests we receive is from consumers wanting to know the difference between Chapter 7, Chapter 11 and Chapter 13 bankruptcy. First and foremost please acknowledge that we absolutely are NOT trying to advise you on which one is best for your personal situation. Only you or your attorney can decide that and we are not offering you legal advice.
What we have done below is provide a basic overview of Chapter 13 bankruptcy to provide our website visitors with general knowledge on the process. We have absolutely no way to know which of the bankruptcy types would be best for you and your situation, if any, or how it could affect your own personal assets and since we are not attorneys, we can not answer questions or e-mails regarding this matter. If you want information on the other chapter types, visit our Chapter 11 Bankruptcy and Chapter 7 Bankruptcy information pages.
This type of bankruptcy filing is more along the lines of a debt repayment plan. The person filing Chapter 13 must be employed so that they can make agreed upon payments (usually a percentage of the total amount they owe to all their creditors combined) to the bankruptcy court at agreed upon intervals. The payments are then disbursed to their creditors so that the creditors at least get some of their money back.
To be able to file Chapter 13, you will need to have enough money leftover after paying your basic living expenses to meet the agreed upon amount you will have to pay to the court each month. If you have no or very little money leftover after paying those basic expenses, it is unlikely a trustee will approve you for a Chapter 13 bankruptcy.
Be aware that things like health club memberships or having your roots touched up at the salon may be basic expenses to you, but likely will not be to the bankruptcy court. So, if you are claiming a lot of extravagant "basic expenses" they may (likely will) be scrutinized by your trustee.
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Chapter 13 is usually filed by debtors who have a large amount of debts that are not dischargeable under Chapter 7, debtors who are behind on car or mortgage payments (and wish to keep the house or car that they are behind in payments on), debtors with large incomes, debtors who have more assets than the state allows who do not wish to liquidate them, as well as a variety of other reasons. For more information about the types of debts that are dischargeable during bankruptcies, you can visit our discharging debts information page.
Again, we must make note that the above information provided to our visitors is for informational purposes only and is not intended to be used as legal advice. Click here for more information on how you can file bankruptcy or if would like to purchase do it yourself bankruptcy form software.
Related Articles:
+ Find out the differences between chapter 13 and chapter 7
+ How to file for bankruptcy by doing it yourself
+ There are alternatives to claiming personal bankruptcy
+ Get the facts on discharging credit card debts in bankruptcies
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