The Difference between Chapter 7 and Chapter 13 Bankruptcy

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Often times, an individual who files for bankruptcy is a middle-class citizen with a full-time job, a house, and several children. When facing bankruptcy, it is important to turn to an experienced attorney to provide you with your best options and guide you through the process.

Chapter 7 Bankruptcy

In order to file for Chapter 7 Bankruptcy, your family income must be less than the average family income within the county that you live. When you file, certain assets will not be seized and you are allowed to keep them. Such things may include bank accounts, pension plans, automobiles, IRA’s and your house. In addition to this, Chapter 7 Bankruptcy discharges most of your debt. This means you may not have to pay credit card debt, personal debt, medical bills, automobile repossessions, and foreclosures.

Chapter 13 Bankruptcy

Chapter 13 Bankruptcy is in place for families that earn above the average income for their county as well as maintain assets and value to their home. In order to be eligible for Chapter 13 Bankruptcy, you must be an individual with a regular and disposable income at the end of every month. In addition to this, your unsecured debts cannot be over $360,000, and your secured debts cannot be over $1,310,000.

In order to keep your assets under Chapter 13 Bankruptcy, you must be under the protection of the Bankruptcy Court. This requires you to submit a “plan” to pay your debts over the course of 3-5 years. This allows you time to catch up on certain payments without creditors collecting your possessions. Once the payment of this plan is completed, the outstanding debt is discharged.

Non-Dischargeable Debt

While some debts may be released, there are other debts that will not be ignored. “Non-dischargeable” debts require payment for student loans, child support, recent income taxes, restitution ordered by a Criminal Court, any fraud debts, and civil judgments for injuries due to deliberate wrongdoing or driving while intoxicated.

Automatic Stay

When you file for bankruptcy, the Bankruptcy Court enforces what is called the “Automatic Stay.” This allows you some relief, as it forbids creditors from any collection activities. This may include lawsuits, collection calls/letters, bank restraints, foreclosures or repossessions. There are certain benefits of the Automatic Stay that can help you while in debt:

  • It is filed immediately
  • Collectors cannot pursue debts
  • Prevents harassment
  • Gives you room to breathe while recovering stability


If you or a family member is considering filing for bankruptcy and need the help of a skilled attorney, contact the Law Offices of Allen A. Kobler, Esq. today.

If you require the services of an experienced Business Law or Bankruptcy attorney, contact the Law Offices of Allen A. Kolber, Esq. today to schedule a consultation and discuss your options.