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Chapter 7 bankruptcy works differently from Chapter 13 bankruptcy

January 8, 2015 by · Leave a Comment 

Article written by : MLAVA Financial Solutions

Chapter 7 bankruptcy requires the debtor to seek discharge of his or her debt in exchange for declaring all his or her assets to an examiner who is an impartial third party and works on behalf of both the debtor and the creditor. Depending on your assets and liabilities as reviewed by the impartial third party, your debt may get discharged allowing you to make a fresh start. The third party is looking for assets with equity after taking into consideration of cost of sale of each asset. However, remember not all debt including student loans can be discharged under this process.

Chapter 13 filings for bankruptcy work differently when compared to Chapter 7 filings. Chapter 13 is for individuals or married couples that have regular income and seeking help to keep their assets. This process could take longer time period, up to five years, and involve a payment plan to pay off the debt. The length of time to repay the debt depends on individual’s income and the ability to make monthly installment payments. At the end of the process debtor retains the asset. Also, it is a process for those who do not qualify to file under Chapter 7.