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How Does Chapter 13 Differ From Chapter 7?

Someone with just credit card and other unsecured debt should file a Chapter 7 bankruptcy because they would go to a hearing within a month and have a discharge within about four months after that and be done with all of their debts whereas someone who filed a Chapter 13 would be in the bankruptcy system for between 3 and 5 years depending on the length of their plan.

Chapter 7 is definitely better for someone with just unsecured debt as long as they qualified. There is a means test to determine if their income is too high to simply discharge their debt; if they are making too much money, then they may be forced into a Chapter 13 instead.

When Is Chapter 13 Preferable To Chapter 7?

In my opinion, Chapter 13 has very specific uses, such as if someone needs to consolidate their car loan due to a high interest rate or they are so far behind on their car or house payments that they are facing repossession of their vehicle or facing foreclosure of the home. Also, if someone has serious tax problems, then Chapter 13 can stop the IRS bank levies and wage garnishments and allow for the tax debt to be repaid over 36 or 60 months as well.

For more information on Choosing Chapter 13 or Chapter 7, a free initial consultation is your best next step. Get the information and legal answers you’re seeking by calling (858) 278-2800 today.

San Diego Bankruptcy Guide by Steven Bliss

Bankruptcy Basics
In California

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