What is the Difference Between Chapter 7 and Chapter 13?

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Presentation Description

A guide for consumers filing for bankruptcy protection in New York.

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What is the difference between chapter 7 and chapter 13? A Guide for Consumers Filing for Bankruptcy Protection

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Chapter 7 and Chapter 13

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Chapter 7 and Chapter 13 bankruptcy are the most common types of bankruptcy that consumers file

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Both can provide relief from your debts

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When you file for Chapter 7 or Chapter 13, collections activities against you must stop immediately

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There are important differences between Chapter 7 and Chapter 13

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Chapter 7 Bankruptcy

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Chapter 7 is a liquidation bankruptcy

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Non-exempt assets are sold in order to pay creditors back money that is owed

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After creditors are repaid from the sale of assets & available funds, eligible debts are discharged

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You do not have to pay them back

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Chapter 7 is Means Tested

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To file for Chapter 7 bankruptcy protection, you must make less than the median income in your state for families with your household size

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If you make more than the median, you cannot file Chapter 7 unless you pass a means test showing you don’t have disposal income to pay towards your debts

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Chapter 13

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Chapter 13 is different from Chapter 7 because it does not require the sale of assets

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You can keep all of your possessions in Chapter 13

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Chapter 13 requires the creation of a repayment plan that creditors approve

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You must pay back a portion of your debts over 3-5 years

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At the end of the payment plan, the remaining debt balance is discharged

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Chapter 13 is Wage Earner’s Bankruptcy

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You are not required to pass a means test in order to file for Chapter 13 bankruptcy

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People with an income that is too high for a Chapter 7 filing can get relief from their debts by filing a Chapter 13

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Learn More About Bankruptcy in Long Island

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Click to visit: www.ny-bankruptcy.com

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