Chapter 7 and Chapter 13

Chapter 7

Chapter 7 is the easier, quicker form of bankruptcy. As soon as you file a bankruptcy petition, all collections stop—that includes phone calls, garnishments, law suits, foreclosures, etc. If creditors receive anything in a Chapter 7, it’s from the liquidation of property. Most people do not lose any property in a Chapter 7 because it is exempt from collections. It is important to talk to an attorney about whether your property is exempt. If your household income is over the median income for the state of Washington, you may be required to file a Chapter 13 bankruptcy instead. Click here for a list of the median incomes, state by state, in the U.S.

Chapter 13

Chapter 13 can be fairly complex but is essentially a repayment plan that lasts three to five years. The amount you pay depends on your income and expenses. As with a Chapter 7, once a Chapter 13 is filed, all collections stop, however, you are also afforded longer-term protection from some creditors, such as the IRS or a mortgage company trying to foreclose. In addition, Chapter 13 can bring more relief by allowing you to catch up on a mortgage, back taxes, child support, pay off a car loan, or even reinstate a driver’s license that has been suspended for unpaid tickets. Click here for a list of the median incomes, state by state, in the U.S.