Folks in Michigan have probably heard that most consumer bankruptcy filings are done under one of two chapters of the bankruptcy code. Chapter 7 and Chapter 13 are the two chapters in question. What are the differences between these two? From a consumer's point of view, is one more desirable than the other?
Chapter 7 bankruptcy is also called liquidation bankruptcy. Consumers who are eligible for Chapter 7 bankruptcy will have most of their eligible debts erased after the bankruptcy process is complete. In exchange, some of the consumer's assets may be subject to liquidation to pay-off part of the debts owed.