Chapter 13 is technically supposed to stay on the debtor’s record for ten years, but in real practice it stays on for seven. This particular feature encourages people to file for Chapter 13 bankruptcies over Chapter 7, because it allows the creditors to receive something rather than almost nothing, in the case of a Chapter 7.

1. Chapter 7 Bankruptcy and Chapter 13 Bankruptcy
Author : Jim Knight
Congress made sweeping changes to the bankruptcy laws that gave consumers more
incentive to seek bankruptcy relief under a different Chapter rather than Chapter 7. This
was called Chapter 13. This particular Chapter allows people with a steady income to
keep property, like a car or a mortgaged house, that they might otherwise lose through
the Chapter 7 bankruptcy process. These changes took effect from October 2005.
All in all, there are four bankruptcy chapters in United States bankruptcy law: Chapter 7,
11, 12, and 13. Chapters 7, 11, and 13 are by far the most common, Chapter 7 being the
most. These bankruptcy laws have many similarities and differences. Here are a few of
them.
In case of Chapter 13, the court can approve a payment plan that can run up to five
years. This process lets you pay off today's debts with future earnings. Although, you
have to have a steady source of income to qualify for this filing.
On the other hand, Chapter 7 bankruptcy is known as "straight bankruptcy." About two
thirds of all bankruptcies fall under Chapter 7. In this case assets are sold and the
proceeds are given to creditors for debt repayment. Chapter 7 can be filed every eight
years, although it is bound to stay on your credit report for ten years. It looks bad to
lenders, and it makes getting credit almost impossible in the couple years following the
filing. This particular bankruptcies chapter can be voluntary or involuntary, often being
initiated by creditors.
Chapter 13 bankruptcies are quiet different from Chapter 7s because they do not
eliminate debt. Instead, they restructure it. Firstly, a payment plan is set up, which
usually takes three years but can last as long as five and any remaining debt after the
plan terminates is eliminated. Chapter 13 is looked upon more kindly than a Chapter 7
due to the existence of the partial payment system.
Chapter 13 is technically supposed to stay on the debtor’s record for ten years, but in
real practice it stays on for seven. This particular feature encourages people to file for
Chapter 13 bankruptcies over Chapter 7, because it allows the creditors to receive
something rather than almost nothing, in the case of a Chapter 7.
Chapter 13 bankruptcies can be filed in every two years unless a Chapter 7 was filed
previously. In cases like these the applicant must wait four years from the time of filing
the Chapter 7. Most of the debt gets eliminated through Chapter 7, and a payment plan
is set up for the remaining with Chapter 13.

2. Although bankruptcies share many similarities, there are important differences. None of
them look good, but Chapter 13 looks better than Chapter 7. All of them adversely affect
one's ability to get credit, especially during the first couple years following the
bankruptcy filing.
However, the great thing about the US is that one can always get a second chance.
Bankruptcies are not the end of the world, and one can recover from them with effort.
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What Happens After File Bankruptcy
The process in which consumers and businesses can eliminate or repay a portion or all of
their debts is also known as the bankruptcy filling. This can be done under the protection
of the federal bankruptcy court. Bankruptcies are split into two types - liquidation and
reorganization, organized under different Chapters of the US Bankruptcy Code.
After a long consideration, when a person has reached the final verdict that bankruptcy is
the only way out, he or she must be aware that filing bankruptcy is an intricate process
and one must be very sure before applying. There is a strict time limit which must be
met in order to get the bankruptcy filed properly to the courts. The first thing to learn in
this process is to know what bankruptcy filling is all about and how to avoid it. One can
learn about these things from a credit counselor.
After going through the basics one has to file a petition with the bankruptcy courts within
the area they live in. The debtor will be offered to pay the legal fees in installment or in
some rare, extreme cases these fees will be waived. This decision is made by the court
and every bankruptcy case is different from the next. Many people have been under the
impression that there is a standard and generic way to handle bankruptcy filings, when in
fact every bankruptcy case is unique in their own way.
The court will then review all the creditor documents and debts and make their decision
as to how to go about paying back these debts. At times the court might hold a meeting
with the main creditors and try to come to an agreement to solve the problem. This is
where many people learn they have believed a myth. It is a general misconception to
believe that the creditors never get their money and therefore they become enemies. But
in reality, the debts get settled and the creditors understand that these things can
happen.
After that meeting is over, it is determined whether the case falls under the type of an
asset or a non asset. If it is held as a non asset, then the debtor’s involvement in the
case gets over unless something unexpected occurs. On the other hand if the case is
deemed an asset this means that the court will have the right to sell the debtor’s home
and any other assets he or she has in their name in order to pay off the remaining debts.
This is why; it is advisable to speak with financial professionals before making radical
decisions. There are many bankruptcy rules and these professionals know how to make
appropriate use of them.
Understanding the whole process is necessary to an individual’s financial success. One

3. doesn’t have to learn the bankruptcy laws as well as a financial advisor but an overall
understanding is really beneficial. Filling for bankruptcy is a serious financial step in
anyone's life and can be recovered from when someone takes each step very carefully.
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