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Chapter 7 versus Chapter 13 bankruptcy

For Americans facing serious debt problems, bankruptcy can be a viable solution to pay down debt and recover financial ground. However, many Kentucky residents are not fully versed in the different types of bankruptcy, particularly the difference between Chapter 7 and Chapter 13 filings. In order to make an informed financial decision, it is important to understand these differences. With the support of an experienced attorney, the resident can move forward confidently into the bankruptcy process.

Chapter 7 bankruptcy is also known as liquidation bankruptcy, as the elimination of unsecured debt comes mostly through selling off nonexempt assets to pay down creditors. Chapter 7 bankruptcy typically allows the discharge of unsecured debts. This is considered the "quick" way to eliminate large chunks of debt.

Chapter 13 bankruptcy, on the other hand, is considered a reorganization. This involves setting up a repayment plan, which must be approved by the court, that will allow three to five years for the filer to pay back some or all of the debt. The repayment plan is structured based upon an individual's income, existing debts and bills, and the types of debt being carried. A monthly payment taking all of this into consideration is paid to a trustee, who then disseminates the payments to creditors.

If this all sounds complicated, it can be. Chapter 7 and Chapter 13 bankruptcy filings require not only paperwork, but also a solid understanding of the process. This is why it can be so helpful for Kentucky residents to seek out the support of a qualified bankruptcy attorney to assist them through the process and out the other side to financial stability. 

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Law Office of Ginger C. Cord, PSC
155 E. Main Street
Suite 330
Lexington, KY 40507

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