Understanding the Differences Between a Chapter 7 and Chapter 13 Bankruptcy

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Bankruptcy may come to mind for people when they are wondering how to deal with bill collectors, foreclosures, wage garnishments, or crushing debt.  It may interest you to know that there are different types of bankruptcy, and your specific situation determines which one is right for you. 

The two most common types of bankruptcy for individuals are Chapter 7 and Chapter 13.  They are vastly different and often people consider both options before making a final decision on what is best for them. Bankruptcy lawyers in Stuart can explain the differences to you.

If, after reading this article, you have additional questions about your own situation, then we welcome you to contact bankruptcy lawyers in Stuart, FL at Crary Buchanan.  At Crary Buchanan, we are proud of our standard of excellence, which has allowed us to thrive as one of the oldest law firms on Florida’s Treasure Coast.  

Our bankruptcy lawyers in Stuart, FL are passionate about giving you the highest quality representation.  Call us today at 772-287-2600, or schedule a free estate consult online with our online contact form.

1. What is Chapter 7 Bankruptcy?

Chapter 7 bankruptcy is a liquidation bankruptcy.  There are laws for Chapter 7 which govern how much of your debt is liquidated, but generally, all unsecured debt like credit cards and medical bills will be discharged.  Anyone filing for Chapter 7 must fall below a specific income threshold.   

Once you file for Chapter 7 bankruptcy, creditors can no longer attempt to collect any of your debts.  This is called an “automatic stay,” and they have to stop calling you and sending letters.  This can be a big relief for some people who have been dealing with harassment from creditors for months or even years.  

People are allowed to keep property deemed exempt when they file Chapter 7.  The law sets out exempted monetary amounts for a property like houses, cars, and household goods, etc. Unless someone’s property is above that allowed exemption, they do not have to deal with the bankruptcy trustee selling any of their property to pay debts.  The guidelines are very specific, and the decision about filing for Chapter 7 bankruptcy can be confusing. Bankruptcy lawyers in Stuart can help you decide if bankruptcy is right for you.

Depending on a person’s income level, assets, and debts, Chapter 7 is a clean slate.  It gives someone a chance to come out of bankruptcy with no debts and a chance at a fresh start.   

2. What is Chapter 13 Bankruptcy?

Chapter 13 bankruptcy is a reorganization type of bankruptcy only open to individuals and sole proprietorships. There is no income limit for Chapter 13, but there is a debt limit for both secured and unsecured debt.  In Chapter 13 bankruptcy, you pay your debts over a 3-5 year period.

Some people have debts that cannot be discharged in bankruptcy such as child support and tax debt but need help and time to pay it off.  If your wages are being garnished for debts like these or other types of debt,  then Chapter 13 can help.  Or, if you are facing foreclosure and want to keep your home but need time to catch up on the mortgage, then Chapter 13 may be a good choice.  

It is still possible to pay less than the amount you owe for unsecured debts like credit cards and medical bills.  The Trustee uses a formula to determine how much disposable income you have, and that disposable income will determine how much you are required to pay to unsecured creditors.  And you will have an end in sight for those types of unsecured debts because you will not pay them after the end of your 3-5 year repayment plan.  Knowing which creditors will get fully paid and which ones won’t be complicated, contact bankruptcy lawyers in Stuart with questions.   

Bankruptcy Lawyers in Stuart, FL Can Explain the Difference Between Chapter 7 and Chapter 13 Bankruptcy.

At Crary Buchanan, we are committed to providing clients with exceptional service in every aspect of bankruptcy law.  You can depend upon our 85 years of experience in the Florida legal industry.  We can help you decide what is best for you and assist you throughout the entire process.

Our legal team is passionate about maintaining the high standards of professionalism and legal service that were established and practiced by founding attorneys Evans Crary Sr. and Evans Crary Jr.  Evans Crary Sr. began his law practice in Stuart in 1927 at a time when Martin County was only two years old.  He became a municipal judge at the age of 25 and served as County Attorney for 23 years. 

During his time as County Attorney, he was elected to represent Martin County in the Florida Legislature.  In 1945 he was elected to the Florida House of Representatives.  He served in the House for nine years and even served as Speaker of the House before he went on to become a member of the Florida Senate.  Today, the Crary Buchanan law firm continues to practice the example of integrity, professionalism, energy, and devotion that was clearly illustrated in the lives of both Evans Crary Sr. and Evans Crary Jr.

Our clients are more than case numbers; they are people. We recognize that you are an individual with unique needs and expectations.  Our team is here to meet your need and exceed your expectations.  When you work with us, you can have confidence that a caring legal advocate is on your side.

If you have more questions or want a dedicated bankruptcy lawyer in Stuart to help you, call 772-287-2600 or schedule a free consult online with our online contact form.  You can always depend on Crary Buchanan for community, experience, and trust.  Call today.  

The information in this blog post is provided for informational purposes only and is not intended to be legal advice.  You should not make a decision whether or not to contact an attorney based upon the information in this blog post.  No attorney-client relationship is formed nor should any such relationship be implied.  If you require legal advice, please consult with an attorney licensed to practice in your jurisdiction