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How do Chapter 7 and Chapter 13 bankruptcy differ?

Many Michigan residents likely have some idea of what bankruptcy entails. Most understand that bankruptcy is an option for those who need escape from a desperate financial situation. However, that is often where a person's understanding of bankruptcy ends. Sometimes, the many details involved in filing for bankruptcy can prove to be a mystery. One facet of bankruptcy that some Michigan residents may not be aware of is the difference between Chapter 7 and Chapter 13 bankruptcy.

Chapter 7 and Chapter 13 bankruptcy differ in one major way -- income level. Only those who are under a certain income level are able to file for Chapter 7 bankruptcy. For those who do meet the income criteria, Chapter 7 bankruptcy is more basic and less time-consuming than Chapter 13. However, those who file for Chapter 7 are often unable to retain possession of certain property.

For instance, those who file for Chapter 7 often have to return retail properties and vehicles to creditors. Chapter 13, on the other hand, oftentimes allows the filer to retain possession of such properties as long as the filer keeps up with the court ordered payments. There are also differences when it comes to nonexempt valuable property. Chapter 7 filers must pay the trustee the fair marker value for the property, otherwise they will have to surrender such property. Those who file for Chapter 13 are able to retain possession of nonexempt valuable property.

These are just a few of the many ways that Chapter 7 and Chapter 13 bankruptcy differ. To truly understand the many complexities involved, it often requires the guidance of someone with expertise in the subject matter. Thankfully, attorneys are available to help guide potential bankruptcy filers through the process.

Source: FindLaw, "Chapter 7 vs. Chapter 13 Bankruptcy," accessed on February 9, 2015

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    Posted by MaryDecember 11, 2015

    "I am overwhelmed by your response to my call, even 10 years after my bankruptcy was discharged. You have more knowledge and expertise than I could have imagined. Because of you, my fears have been put to rest. For that, I'm so very grateful. Thank you many times over. "

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    Posted by ClientOctober 26, 2010

    "... I was extremely impressed with Charles' understanding of the bankruptcy laws to the extent that I felt certain that my best interests were always at the forefront. "

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    Posted by MarleneJanuary 8, 2014

    He helped me thru my 1st bankruptcy and now the second. I had no idea what to expect , but they kept me informed and answered all my questions. Mr. Schneider is the most experienced and knowledgeable lawyer I have ever met. If you have to file call this attorney first!

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