WHAT IS THE DIFFERENCE BETWEEN CHAPTER 7 AND

CHAPTER 13?A Guide for Consumers Filing for Bankruptcy Protection

Chapter 7 and Chapter 13

Chapter 7 and Chapter 13 bankruptcy are the most

common types of bankruptcy that consumers file

Both can provide relief from your debts

When you file for Chapter 7 or Chapter 13, collections

activities against you must stop immediately

There are important differences between Chapter 7

and Chapter 13

Chapter 7 Bankruptcy

Chapter 7 is a liquidation bankruptcy

Non-exempt assets are sold in order to pay creditors back money that is

owed

After creditors are repaid from the sale of assets & available

funds, eligible debts are discharged

You do not have to pay them back

Chapter 7 is Means Tested

To file for Chapter 7 bankruptcy protection, you

must make less than the median income in your state for families with

your household size

If you make more than the median, you cannot file

Chapter 7 unless you pass a means test showing you don’t have disposal income

to pay towards your debts

Chapter 13

Chapter 13 is different from Chapter 7 because it does not

require the sale of assets

You can keep all of your possessions in Chapter 13

Chapter 13 requires the creation of a repayment plan

that creditors approve

You must pay back a portion of your debts over 3-5 years

At the end of the payment plan,

the remaining debt balance is discharged

Chapter 13 is Wage Earner’s Bankruptcy

You are not required to pass a means test in order to file for

Chapter 13 bankruptcy

People with an income that is too high for a Chapter 7 filing can get relief from their debts

by filing a Chapter 13

Learn More About Bankruptcy in Long Island

Click to visit: www.ny-bankruptcy.com