ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

The Difference Between Chapter 13 and Chapter 7 Bankruptcies

Updated on July 23, 2013

Chapter 7 and chapter 13 bankruptcies are judicial processes that serve to protect consumers and businesses from creditor’s action due to inability to pay debts. A chapter 7 bankruptcy is a complete discharge of all debt, chapter 13 is a reorganization of debt. Both processes require legal documents to be filed and court approval.

A private party or a small business that is not a corporation may file for a chapter 13 bankruptcy. A chapter 13 bankruptcy may be a good option for an individual who has regular income and has experienced a financial setback preventing financial obligations to be made as agreed but there is still regular income to pay debt. The chapter 13 trustee will determine how much the debtor can afford to pay and the debtor will make monthly payments to the trustee. The bankruptcy trustee has the authority to wave interest obligation in order to reduce payments. Interest on home mortgages or trust deeds cannot be reduced. This reorganization plan is structured for 3 to 5 years and can prevent home foreclosures and auto repossessions. There must be adequate monthly income to manage the reorganized debt.

A chapter 7 bankruptcy is liquidation and provides for a fresh start as opposed to reorganization. Debtors are allowed to keep their residences and automobiles. If there is a trust deed or mortgage obligation on a residence, it will continue after other obligations have been discharged. A chapter 7 may not be allowed if there is income and it is determined that the debtor would be able to manage the debt under a chapter 13 arrangement. Certain obligations such as child support, unpaid income taxes and student loan obligations cannot usually be discharged in chapter 7 bankruptcies.

Both the chapter 7 and the chapter 13 will provide relief from harassing creditors and give debtors breathing space in order to recover either by liquidating assets or restructuring debt to a manageable level. Legal obligations and benefits of bankruptcies can vary in different states. Any individual or small business experiencing enough financial distress that a bankruptcy is considered should consult an attorney. It is not required to have an attorney in order to file a bankruptcy but the services of a good bankruptcy attorney will liberate the debtor from the stresses of financial distress and allow a person to recover and pay their bills again.


    0 of 8192 characters used
    Post Comment

    No comments yet.


    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at:

    Show Details
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the or domains, for performance and efficiency reasons. (Privacy Policy)
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)