• Call 423-929-7673
  • What Is the Largest Difference Between Chapter 7 and Chapter 13 Bankruptcy?

    Bankruptcy could save your life, and knowing the different types of bankruptcy can help you make an educated choice. The two most popular types of bankruptcy for people are Chapter 7 and Chapter 13. Each type has its benefits and standards for who can use it. Are you eager to learn about the largest difference between Chapter 7 and Chapter 13 bankruptcy? Keep reading to learn more.

    In Chapter 7, assets are used to pay off debts. This gives the debtors a fresh start in a short amount of time. Chapter 13 lets you reorganize your debts, which means you can keep your assets and pay back some of your bills over a few years. Read on to learn more about the main differences between Chapter 7 and Chapter 13 bankruptcy. This will help you determine which might be best for your case.

    Liquidation vs. Reorganization

    If you file Chapter 7 bankruptcy, your belongings will be sold off. A trustee is hired in this type of bankruptcy to sell the debtor’s non-exempt assets so that creditors can be paid. General unsecured debts, like credit card and hospital bills, are the particular types of debt that this process helps eliminate. You are called a secured debtor when you borrow money against property, like with a mortgage or a car loan. If you have a lot of secured debts, there might be better choices than Chapter 7. Instead, you should consider a conversion to Chapter 13, which lets you keep your assets and make a plan to pay back your debts. Talking to bankruptcy lawyers lets you find out the best way to handle your money and whether Chapter 7 is right for you.

    In Chapter 13 bankruptcy, your bills are reorganized instead of your assets being sold. Debtors devise a plan to pay back some or all of their bills over the next 3 to 5 years. A bankruptcy manager is in charge of the plan and gets monthly payments from the debtor to give to the creditors. To switch to Chapter 13, you should meet the means test for Chapter 7 or a plan to pay back your bills. Talk to a bankruptcy lawyer about your choices before filing for Chapter 13 bankruptcy.

    Dos and Don'ts of Chapter 7 Bankruptcy

    Eligibility For Chapter 7 Bankruptcy

    People must pass a means test, which looks at their income, spending, and debt amount, to be eligible for Chapter 7 bankruptcy. This test ensures that Chapter 7 is mainly for people with low incomes and few belongings. It’s important to know the differences between Chapter 7 and Chapter 13 bankruptcy because each is used for different financial problems. Chapter 7 and Chapter 13 take different approaches: Chapter 7 is about getting rid of assets, and Chapter 13 is about reorganizing debt. It’s very important to pick the right type of bankruptcy if you owe much money on personal loans or property settlements.

    Chapter 13 bankruptcy is made for people who can pay back some of their bills over time. Chapter 13 is about reorganization, meaning that debtors can keep the collateral tied to protected debts. Chapter 7 is about dissolution. This helps if you want to keep your house or car while paying off debts like medical bills, credit cards, and personal loans.

    How long it takes to file for Chapter 7 bankruptcy

    Duration in Chapter 7 & 13 Bankruptcy

    Chapter 7 bankruptcy typically takes between 3 and 6 months to finish, from filing to getting rid of the debt. Your non-exempt goods are sold during this time to pay off what you owe. This is a quick way to start if you need help with debt. However, having to deal with protected creditors, child and partner support, and property settlement debts can make the process more difficult. It’s important to know that some bills, like child and spousal support, income and withholding taxes, and other taxes, cannot be taken away.

    In Chapter 13 bankruptcy, the payback plan usually lasts between 3 and 5 years, but this depends on how much money you make and how detailed your plan is. With this method, you can pay off unprotected debt like personal loans and medical bills over time. One of the best things about chapter 13 bankruptcy is that it saves your assets. You won’t lose your house or car if you follow the plan. But there are also downsides, like having to make regular payments and the fact that there might be consequences if you don’t. Chapter 13 bankruptcy is a choice for people with a steady income because it gives you an organized way to handle your bills while keeping essential assets.

    Debt Discharge in Chapter 7 & 13 Bankruptcy

    One big difference between Chapter 7 and Chapter 13 bankruptcy is how the bills are wiped out. Chapter 7 removes most uninsured debts, like hospital bills and credit card debt, so they don’t have to be paid back. This makes Chapter 7 a strong choice for people with many of these kinds of debt. It’s important to remember that some bills, like student loans, alimony, child support, and some taxes, can’t be forgiven. Chapter 13 might be better if you earn less or have bills that can’t be forgiven. To sum up, Chapter 7 vs. Chapter 13, Chapter 7 can help you pay off many bills right away, but which one you choose depends on your specific financial situation. Knowing about these choices can help you make an informed choice about how to file for bankruptcy.

    Asset recovery in Chapter 7 bankruptcy

    People filing for Chapter 13 bankruptcy must follow a court-approved payback plan to pay their creditors. Any leftover unpaid debt may be forgiven at the end of the plan time. This organized method helps people handle their bills, like tax debt and ongoing health insurance fees, while keeping their assets, like their house or car, safe. In the same way as Chapter 7, though, some bills, like student loans, alimony, child support, and taxes, cannot be forgiven. Talk to a bankruptcy law firm if you’re considering filing for bankruptcy and need help figuring out how to handle debt forgiveness and protected debt, like mortgages and car loans. They can help you understand your choices and avoid being harassed by collectors, making your financial change go more smoothly.

    If you need assistance with personal or business bankruptcy and filing in Tennessee, reach out to The Pope Firm and Charles Pope, Attorney At Law.

    Client Testimonials


    Frequently Asked Questions

    Here are some commonly asked questions about bankruptcy and eviction:

    When you file for bankruptcy, an automatic stay is usually put in place. This can temporarily stop the removal process. This stay means that your owner can only proceed with the eviction case once the bankruptcy court reviews it again.

    The automatic stay might continue the eviction if your owner got a court order to take back the property before you file for bankruptcy. Even though the tenant filed for bankruptcy, the owner can still take eviction measures.

    Most of the time, if you file for Chapter 7 bankruptcy, you won’t have to pay back rent to stay temporarily. If you want to stay for a long time, though, you would have to work out a deal with your owner or find another way to pay the rent that is past due. This is because Chapter 7 is mostly about getting rid of bills, not changing payment plans.

    You can make a payment plan to pay off your past due rent over time with Chapter 13 bankruptcy. This can help you stay in your home for a long time and avoid being evicted. It gives you an organized way to catch up on your rent payments while stopping the eviction process.

    The owner can file a declaration with the court if they say you are putting the property in danger or doing illegal things like drug use. The automatic stay can be lifted if the court agrees with the landlord’s claims. This means the eviction process can continue even though the debtor has filed for bankruptcy.


    Choosing between either Chapter 7 or Chapter 13 bankruptcy depends on your finances and ambitions. Chapter 7 liquidates debts faster, making it suited for low-income and asset-poor people. However, non-exempt property may be lost. However, Chapter 13 offers debt restructuring for persons with consistent earnings who can repay over 3–5 years. Debtors may keep their house and automobile while paying off secured and unsecured debts after the plan. Understanding the differences will help you choose the right bankruptcy option for your requirements and finances.

    Are you going bankrupt? You’re not by yourself. The Pope Firm, led by Charles Pope, has helped people and companies file for Chapter 7, Chapter 11, and Chapter 13 bankruptcy for over 25 years. Our team specializes in helping people avoid bankruptcy, deal with the means test, automatic stay, and debt settlement. They have experience in both business and loans. We’re here to help you with answers unique to your situation, whether you’re having trouble with student loan debt, default, or being bothered by creditors. Contact us today to set up a free case review and talk about your choices.

    Chapter 7 Bankruptcy Filing Criteria