Bankruptcy: Comparing
Chapter 7 with Chapter 13
C h a p t e r 7 |
C h a p t e r 13 |
Debtor’s
Perspective |
Creditor’s Perspective |
Debtor’s
Perspective |
Creditor’s Perspective |
- Complete forgiveness of most debt
|
- Total loss – must write off an asset
|
- Partial debt forgiveness likely
|
- Gets at least some of the money owed it
|
- Debtor gets a “fresh start” – walks away with “clean slate”
|
- Creditor is left with bad debt on its books
|
- Must continue with debt burden until paid off
|
- Regular stream of income for period of repayment
|
- Process is usually complete within 120 days
|
- Creditor may have worked with debtor for several years before bankruptcy petition on a plan to pay down the debt– now creditor is not given very much time to contest & is often useless for creditor to contest anyway
|
- No quick fix – repayment period usually 3-5 years
|
- Repayment more equitable than discharge of debt since creditor may have lent its money to debtor in form of granting credit, for years prior to petition
|
|
- Too quick and too easy – invites abuse
|
- Can help preserve business relationships where debtor intends to continue operating, or does not want to “start from scratch” again after CH 7 discharge
|
- Often see it to their benefit to work with debtors who show intent to “stick it out” and repay their debt instead of seeking discharge under Chapter 7
|
- Court’s involvement usually ends after 120 days with discharge
|
- Forever foreclosed from asserting any rights to collect the debt after discharge granted (usually 120 days after filing)
|
- Ongoing supervision and involvement of the bankruptcy court until payment plan completed
|
- Supervision viewed as valuable in keeping debtor on course with payment plan
|
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For more information about bankruptcy, please see the other pages in this section:
- Basics of Bankruptcy
- Getting Started
- Pre-Filing Timeline
- Post-Filing Timeline
- Paperwork
- Chap. 7 or 13? (you are on this page)
- More Information
How to Contact Bruce A. Wilson, APLC
I make an effort to accommodate urgent matters, and new clients are always
welcome. For more information or to make an appointment, please contact me either by:
Telephone: (619) 497-0627
E-mail:
I can be reached by telephone Monday through Friday, 9:00 a.m. to 5:30 p.m. You may also use the
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