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Williams Law Center of East Peoria is fully licensed and equipped to offer you all the legal assistance you need for bankruptcies, including:

Q: What’s the difference between Chapter 7 & Chapter 13 bankruptcy?

This question is often asked when a person is considering filing a bankruptcy. The major difference can be explained simply, in just one point.

Chapter 7 often has no repayment plan. It is considered a “fresh start” for most filers.

Chapter 13 has a repayment plan. It is the type of bankruptcy that can have any or all of these features: your debts are reorganized, interest rates are lowered, and a reduced amount of the original debt is repaid. It could be considered as negotiated debt repayment.

  • Chapter 7 Features:
    • Debt elimination without restructuring debts
    • Filers can keep all or most of their property
    • Some property may have to be liquidated to pay off debts
    • No repayment plan
    • Often quicker than chapter 13
    • Income has to be less than a set amount
    • Does not protect you from home foreclosure
  • Chapter 13 Features:
    • Debt elimination by restructuring debts
    • Filers may have to forfeit some of their property
    • Requires a stable income
    • Has specific debt limits
    • Typically a 3-5 year repayment program
    • Repayment is often much less than the amount of the debt
    • All disposable monthly income must be committed to the plan
    • Often guards you from home foreclosure – as long as payment plan is current
  • Features of both:
    • Wipes out most of your general unsecured debt
    • Will not touch a 401K, IRA, or other retirement savings account
    • You will be required to attend financial counseling
    • The court will appoint a trustee over your bankruptcy
    • Does not wipe your credit clean
    • Credit reports will show your bankruptcy for 10 years
    • Late payments and debt collections disappear from credit reports after 7 years
  • Chapter 7
    • No Repayment Plan
    • Fresh Financial Start
    • Save Your Assets – Automobile, Home, Property & Retirement
    • First bankruptcy consultation is free!
  • Chapter 13
    • Debt Consolidation Payment Plans
    • Lower Monthly Payments To An Affordable Amount
    • Pay Taxes & Child Support Over Time
    • Reduce Interest & Penalties
    • Save Your Assets – Automobile, Home, Property & Retirement
    • First bankruptcy consultation is free!
  • Stop issues with:
    • Credit Card Problems
    • Foreclosures
    • Harassment
    • Lawsuits
    • Repossessions

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