The Differences Between Chapter 7 and Chapter 13 Bankruptcy
Johnston, Moore & Thompson, a Huntsville Bankruptcy Law Firm
Johnston, Moore & Thompson has provided legal services relating to debt relief for over 70 years. We help individuals, families and businesses under major debt burdens understand their options and choose the best possible path forward into a new financial future.
Our law firm emphasizes the value of direct communication between lawyer and client. For that reason, bankruptcy clients of Johnston, Moore & Thompson work directly with attorney Thomas Williams, who currently leads our bankruptcy practice, for the duration of the process.
If you have questions about filing for personal bankruptcy using either Chapter 7 or Chapter 13, or if you are facing creditor harassment, call Johnston, Moore & Thompson toll free at 888.636.3759 to schedule a free and private consultation with a knowledgeable Alabama bankruptcy lawyer.
Chapter 7 Bankruptcy Compared to Chapter 13 Bankruptcy
The United States' bankruptcy laws are incredibly complex. The Internet abounds with summary descriptions of the differences between Chapter 7 and Chapter 13 bankruptcy. However, only a capable bankruptcy lawyer can examine your unique circumstances and describe the advantages and disadvantages of Chapter 7 versus Chapter 13.
With that in mind, we provide a brief overview of the two main forms of bankruptcy for individuals and families:
- Chapter 7 bankruptcy is sometimes called liquidation bankruptcy, which frightens people unnecessarily. Chapter 7 bankruptcy has qualification requirements (called an income test or a debt-to-income ratio). If you meet the qualifications, then all eligible debt is forgiven after you sell non-exempt assets to pay off what debt you can. Very few people who qualify for Chapter 7 bankruptcy have non-exempt assets. Chapter 7 bankruptcy may allow you to keep your home via a mortgage reaffirmation agreement. Chapter 7 bankruptcy is frequently the best choice for people who have lost their jobs or who have extensive medical bills they can't see how to pay back.
- Chapter 13 bankruptcy is sometimes called the wage earner's or debt consolidation bankruptcy because it is available for those people whose incomes are too high to qualify for Chapter 7 bankruptcy. Under Chapter 13 bankruptcy, the petitioner proposes a debt repayment plan to the bankruptcy court, showing how he or she can repay all or most debt within a three- to five-year period. The main advantages of Chapter 13 bankruptcy are: (1) You control your debt repayment instead of being at the mercy of your creditors' demands. (2) Chapter 13 bankruptcy may be the best way to keep your home safe from foreclosure. (3) A bankruptcy trustee takes control of your debt repayment and all creditor harassment stops as long as you comply with the terms of the court-approved repayment plan.
Contact Johnston, Moore & Thompson for a Free Bankruptcy Consultation
Work with an efficient and qualified bankruptcy lawyer at Johnston, Moore & Thompson to decide whether bankruptcy is, in fact, your best debt relief option.
To schedule a free and private consultation, call toll free 888.636.3759 or use our online contact form.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.