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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.

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