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Advantages of a Chapter 7 Over a Chapter 13

Most people that file bankruptcy file under Chapter 7, which is the form of bankruptcy where there is no monthly payment to a trustee. Chapter 7 has numerous advantages over Chapter 13. Here are the key advantages:

Chapter 7 Bankruptcy is a Relatively Short Process

Once you file the Chapter 7, it is typically open with the Bankruptcy Court for 90 days. In contrast, a Chapter 13 is open with the Bankruptcy Court for 3 to 5 years.

Chapter 7 Does Not Require A Monthly Payment

In bankruptcy, you typically only have to pay to your creditors as much as you can afford.

In a Chapter 7, it’s zero. There is no monthly payment to a trustee in a Chapter 7 simply because the people that qualify have no disposable income to pay towards unsecured creditors, like credit cards.

In a Chapter 13 bankruptcy, you are proposing a plan to repay whatever you can to your creditors for a 3 to 5 year period. The minimum payment for a Chapter 13 is approximately $200/month. For just a 36-month plan, that totals $7,200. As you can see, Chapter 13 is for people that have some disposable income to pay towards credit cards.

Chapter 7 is Less Expensive

Attorneys fees in a Chapter 7 less because your attorney is only working with you for a few months. In contrast, attorneys fees in a Chapter 13 are more because your attorney will be working with you for 3 to 5 years.

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