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Chapter 7 vs. Chapter 13

Both Chapter 7 and Chapter 13 bankruptcies are an option for individuals and married couples looking to file for bankruptcy. However, these two forms of bankruptcy are not the same, each having its own advantages and disadvantages.

Chapter 7 Bankruptcy

Through Chapter 7 bankruptcy, a debtor is able to eliminate all of his or her dischargeable unsecured debts, which include medical bills, credit card bills, personal loans, utility bills, certain tax debts, business related debts, commercial and residential leases, judgment from creditors, and more. There are, however, certain types of debts that cannot be discharged through Chapter 7 bankruptcy, such as alimony/maintenance, child support, matrimonial settlements, most student loans, most tax debt, debts obtained through fraudulent or false pretenses, court-ordered fines, and restitution.

Once a person's unsecured debts have been discharged through Chapter 7, all of those debts will be eliminated from their credit report. He or she will no longer be required to pay back creditors, and creditors will be prohibited from continuing to harass the debtor for money.

Chapter 13 Bankruptcy

Rather than discharging all of one's unsecured debts, under Chapter 13 bankruptcy a person consolidates his or her debts and pays them off through monthly installments over the course of three to five years. After the three to five year period, the debtor will have repaid all of his or her debts to creditors.

Chapter 13 is typically sought when a debtor doesn't qualify for Chapter 7 bankruptcy. The advantage of filing for bankruptcy protection under Chapter 13 is that debtors are not at risk of losing such assets as their home, cars, etc., as long as they continue to pay off their debt under the terms of their bankruptcy plan. In addition, the amount debtors are required to put towards their monthly payments is based on their level of income, current monthly expenses, and any non-exempt assets.

Deciding Which Type of Bankruptcy is Right for You

At Jacoby & Jacoby, we are committed to helping people throughout Nassau and Suffolk Counties alleviate the burden of mounting debt through Chapter 7 or Chapter 13 bankruptcy. With more than 50 years of combined legal experience, you can depend on us to help you find a bankruptcy plan that works for your specific needs and financial situation. We know the difference a clean financial slate will make in your life. You will no longer suffer from the overwhelming anxiety and worry that accompanies a life filled with inescapable debt. Instead, you can look towards the future at a life free of creditor harassment and endless financial troubles!

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