Chapter 7 Bankruptcy: A Liquidation Option
Chapter 7 bankruptcy is a liquidation process that discharges most unsecured debts, leaving you with limited assets. This option is best for individuals who have few assets and want to quickly eliminate high-interest debt.
- Discharge of unsecured debts: Credit cards, medical bills, and personal loans
- Elimination of high-interest debt: Credit card debt, payday loans
- No restrictions on assets; can sell or liquidate assets to pay creditors
Chapter 13 Bankruptcy: A Reorganization Option
Chapter 13 bankruptcy is a reorganization process that allows you to create a repayment plan to pay back debts over time. This option is best for individuals who have regular income and want to keep their assets, but need to manage debt.
- Debt repayment: Pay back debts in 3-5 years
- Must meet income limits: $1,184/month for joint filers; $858/month for solo filers
- No discharge of secured debts (e.g., mortgages, car loans)