Understanding if Chapter 7 or Chapter 13 Is Right for You

Basically, a Chapter 7 is a way for a person to eliminate their unsecured debts. What they’re seeking is a fresh start, a clean slate, and they want to continue to pay for certain secured debts like their house note or their car note, but discharge or eliminate their unsecured debt like credit card bills, medical bills, or signature loans.

Chapter 13, by contrast, is a way for a debtor to reorganize their debts over a Chapter 13 plan of three to five years. What that means is that you’re going to take the back payments on your house note, the vehicle note, any kind of loans that you have for appliances, and lump those all together into a monthly planned payment and pay that out monthly over an extended period of time. That usually allows a person to keep the things that they worked hard to get in the first place and pay their creditors as much as they can afford.