What is the difference between Chapter 7 and Chapter 13?
Chapter 7 is liquidation: a trustee sells your non-exempt assets and discharges qualifying unsecured debts in a few months. Chapter 13 is reorganization: you keep your property and repay creditors through a 3 to 5 year plan based on your disposable income.
Who qualifies for Chapter 7?
If your annual income is below your state median for your household size, you generally qualify. If it is above the median, you must pass the means test (Form 122A-2), which compares your income to IRS-standard allowed expenses to see whether you have enough left over to fund a Chapter 13 plan.
Can Chapter 13 stop a foreclosure?
Yes. Filing Chapter 13 triggers the automatic stay, halting foreclosure, and lets you cure mortgage arrears over the life of the plan while maintaining regular payments. This is a common reason to choose Chapter 13 over Chapter 7.
Which debts are not discharged in bankruptcy?
Most student loans (absent undue hardship), recent taxes, child support and alimony, and debts from fraud generally survive both chapters. Chapter 13 can, however, help you repay non-dischargeable priority debts in an organized way over the plan period.