Chapter 7 and chapter 13 bankruptcy are the two types of personal bankruptcy people can file in the United States. Chapter 7 and chapter 13 bankruptcy differ in several ways. In chapter 7 bankruptcy, the debtor is allowed to discharge all or most of their debt. In chapter 13 bankruptcy, the debtor must repay at least some if not all their debt as worked out in a repayment plan. The United States Bankruptcy Code requires that in order for a person to file Chapter 13, the individual cannot have more than $922,975 in secured debt and $307,675 in unsecured debt.
Certainly, there are drawbacks to filing chapter 7 and chapter 13 bankruptcy. For example, on average, a personal chapter 7 and chapter 13 bankruptcy stays on the credit report of an individual for 7 to 10 years, making it hard to get approved for a mortgage, a credit card, or a car loan without a cosigner. As well, with both chapter 7 and chapter 13 bankruptcy, there is the unpleasantness of having to stand before a judge and admit on the record that you are cannot pay your debt. This is particularly painful for those filers who, due to serious financial hardship due to an act of God, are forced to file chapter 7 and chapter 13 bankruptcy through no fault of their own. However, there are many benefits to filing chapter 7 and chapter 13 bankruptcy as well, and for certain people, these benefits can outweigh the disadvantages. The biggest advantage of filing for personal bankruptcy is that doing so wipes out most types of debt, making it impossible for the majority, if not all, of those companies and individuals to whom you owe money to collect payment from you.
There are many bankruptcy myths that scare prospective filers. However a good local bankruptcy attorney can provide bankruptcy questions and answers so that you have all of the correct information and do not fall prey to myths about bankruptcy. Federal Bankruptcy Rules determining the course of, and requirements for, chapter 7 and chapter 13 bankruptcy apply in equal measure to both the everyone who files chapter 7 and chapter 13 bankruptcy.