What are the differences between Chapter 7 and Chapter 13 Bankruptcy?

There are many types of bankruptcies – up to 6 different types! However, the most common types of personal bankruptcy fall under two chapters: Chapter 7 and Chapter 13.

 Chapter 7 Bankruptcy

The “fresh start” bankruptcy filing. Chapter 7 is for individuals who cannot pay all of their debts, this makes up most of the bankruptcy filings in the United States! Under a Chapter 7 filing you are no longer responsible to pay back old debts once the bankruptcy has been completed. A court appointed trustee will determine what assets you may have and sell them in order to pay back creditors as much as possible.

 Chapter 13 Bankruptcy

The “reorganization” bankruptcy filing. Chapter 13 is for individuals who are currently unable to pay back some debts. This filing allows people to keep their property with the promise to pay back creditors in the future with future income over a set period of years.

 At Parkman White, LLP a bankruptcy attorney will review your current financial situation by examining all your assets and debts. During the conversation you and your Birmingham lawyer will find the best path for you and your finances.