Going through bankruptcy is a difficult time, but it is important to understand your options. If you are thinking about declaring bankruptcy in Milwaukee, then you have two main options as an individual. According to Experian, these two options are called Chapter 13 and Chapter 7. Which one of these you will file depends on your financial standing.
Chapter 7 bankruptcy is intended for those who are not in a position to pay back their debt. This type of bankruptcy is often called a liquidation bankruptcy because it liquidates the assets of the debtor in order to pay back the debt. Usually, debts settled by Chapter 7 bankruptcy will result in a discharge given after 5 months. In order to be eligible for Chapter 7 bankruptcy, you must have an income below a certain threshold.
On the other hand, Chapter 13 bankruptcy is more commonly known as a reorganization bankruptcy. With a Chapter 13 bankruptcy, you will likely be able to keep your house, car, and other assets. Usually, a Chapter 13 bankruptcy will involve getting the debtor on a payment plan that can last between three years and five years.
The main benefit to a Chapter 7 bankruptcy is that it allows the debtor to get a fresh start faster. However, often filing Chapter 7 bankruptcy will result in losing your house and other assets to liquidation. With Chapter 13 bankruptcy you get to keep your assets, but it takes much longer to get through the bankruptcy process.
This article was designed to teach you the difference between Chapter 7 and Chapter 13 bankruptcy. It is not intended to be taken as legal advice.