What is the difference between a Chapter 7 and a Chapter 13 bankruptcy?
Bankruptcy is a legal way to give a person in financial trouble a “fresh start.” There are different kinds of bankruptcy. Most people use either a Chapter 7 or Chapter 13 bankruptcy. Chapter 7 is a liquidation bankruptcy. In a Chapter 7 bankruptcy, the court makes an order saying that certain debts do not have to be paid back. Chapter 13 is a reorganization bankruptcy. It allows a person to make a plan to pay some debts over a period of time. When the payment plan is completed, the remaining debts are discharged.