Chapter 7 bankruptcy is more difficult to qualify for than Chapter 13 bankruptcy, since those who file for Chapter 7 are usually not required to repay a portion of their debts. With some exceptions such as student loans, recent taxes, criminal penalties, and other non-dischargeable debts, Chapter 7 bankruptcy discharges pre-filing debts. This type of bankruptcy requires filers to pass a means test to prove that they are unable to make adequate debt payments. Theoretically, people who file for Chapter 7 must surrender all non-exempt assets for liquidation. In practice, however, almost all Chapter 7 clients are able to keep all of their assets. A Chapter 7 bankruptcy remains on an individual’s credit record for up to 10 years, and some creditors may view Chapter 7 less forgivingly than they do Chapter 13.
For Chapter 13 bankruptcy, filers are usually required to repay a portion of their debt through a payment plan that lasts three to five years. As in Chapter 7, clients who file for Chapter 13 bankruptcy are usually not required to surrender assets. With some exceptions, Chapter 13 bankruptcy is reported on credit bureaus for only 7 years.
Paul Caston is a debt relief agency as defined by the United States bankruptcy code. The office helps people file for relief under the bankruptcy code.