Chapter 7 vs. Chapter 13

Difference Between Chapter 7 and Chapter 13 Bankruptcy

If you are considering bankruptcy, there are a few things you need to know. Like, what's the difference between Chapter 7 and Chapter 13 bankruptcy?

The difference between Chapter 7 and Chapter 13 bankruptcies is essentially liquidation versus adjustment of payments. One seeks to be discharged from the obligations of debt, and the other seeks to modify the payment schedule of the debts.

Chapter 7 

  • Liquidation 
  • Individuals and businesses can file 
  • Allows debtors to quickly discharge most debts and get a fresh start

Chapter 13 

  • Reorganization 
  • Businesses can file 
  • Allows debtors to keep their property and catch up on missed mortgage, car and nondischargeable priority debt payments

Which Bankruptcy Is the Right One For Me?

In a Chapter 7 bankruptcy, an individual qualifies when they have little or no property except for basic necessities like clothing, food, rent, and utilities.

A Chapter 7 debtor has little or no money left over after paying for these basic expenses each month and may even be in a position in which he or she is unable to meet those basic expenses. A Chapter 13 debtor has a regular income, can meet the payments of their basic needs, but just has been unable to stay current on payments on other debts, and needs time to solve the problem.

The Advantages of Chapter 7 and Chapter 13

The advantage of a Chapter 7 bankruptcy is that most unsecured debts can be discharged, or completely eliminated. The process moves very quickly, usually resolved within a few months. Also, creditors are not allowed to contact you during the pendency of the bankruptcy or after the debts have been discharged

The advantages of a Chapter 13 bankruptcy include the fact that you can keep most of your property, and have three to five years to catch up on your delinquent accounts. The court will appoint a trustee to receive your payment each month, and then they distribute that money to your different creditors for you. At the end of the process, the remaining debt is discharged. The savings can be significant.

Why Choose Our Chapter 7 & Chapter 13 Bankruptcy Lawyers

At the Law Offices of Marshall D. Schultz, we will evaluate your situation and determine the best course of action for you. Contact us today for a free evaluation. If bankruptcy is the best option for you, our Detroit bankruptcy attorneys will meet with you as soon as possible and guide you through the process of filing the bankruptcy petition.

With over 50 years of experience helping debtors straighten out their financial problems and get back on track, we are dedicated to helping debtors get the relief they deserve. Call us today for the best bankruptcy lawyer near you!

Call our office in Detroit or Southfield to schedule an appointment with an experienced bankruptcy lawyer today (888) 822-6730.


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