All posts by Erik Atzbach
Chapter 7
A filing under chapter 7 is called a liquidation, which is the most common type of bankruptcy proceeding. Chapter 7 bankruptcy lasts approximately four months from the time it is filed in court until the discharge order is entered. Chapter 7 bankruptcy discharges (“cancels”or “wipes out”) most debts completely.
Chapter 13
A filing under chapter 13 reorganization is a repayment plan to creditors under the supervision of the bankruptcy court (and more specifically the chapter 13 trustee) for debtors with regular income. The debtor must formulate a plan of repayment, which lasts for three to five years (the “plan”). The debtor submits a portion of his/her future earnings to the chapter 13 trustee, who then in turn, distributes these funds to the creditors pursuant to the plan. The plan must be entered into in good faith and must be confirmed by the court.