Chapter 7 Bankruptcy

What is the difference between Chapter 7 and Chapter 13 Bankruptcy?

If you are looking for a bankruptcy attorney but aren’t sure what type of bankruptcy suits you best, realize that there are two contrasting types: Chapter 7 and Chapter 13 bankruptcy. The Law Offices of Jason R. Moseley concentrates in both types and can answer any questions you may have about which you qualify for. There are some big differences between the two and you need to be aware that each one sends your life down a different path. Each one is a financial tool designed for two very different financial situations. Understand that there are circumstances and criteria you must meet to be eligible for either type. Many times people who are in the gray area between having too much disposable income and too much debt are required to pursue a Chapter 13 filing.

What is Chapter 7 Bankruptcy?

Chapter 7 bankruptcy is designed to free you from credit card debt, medical bill debt, and other unsecured loans. However, you will not qualify if your income is too high and you have an excess of disposable income. The idea is to liquidate your property and assets in exchange for discharging the remainder of your debts. Your creditors acquire the value from your nonexempt property, and you become free of your debt burdens at the additional cost of significantly lowering your credit score. However, if you have too much disposable income you may be forced to file for Chapter 13.

What is Chapter 13 Bankruptcy?

Conversely, Chapter 13 bankruptcy is designed to restructure your debts, create an extended repayment plan, and release you from only a portion of your debts. As opposed to Chapter 7, your assets are not liquidated to pay off your debts and if you qualify you have the ability to maintain ownership of personal property such as your home, vehicles, and nonexempt assets. Many times individuals who face foreclosure on their homes can buy time by filing for Chapter 13. Although, you will still be obligated to pay family law expenses such as spousal maintenance and child support. Think of Chapter 13 proceedings as a way to “catch up” on your debts and Chapter 7 proceedings as a way to wipe the slate clean and start over. A typical timeline for a repayment plan under Chapter 13 is three to five years and can save you from losing everything.

Finding a Local Bankruptcy Attorney

Depending on which type of bankruptcy is right for your situation, you need to either seek the help of a practiced Chapter 7 bankruptcy lawyer or Chapter 13 bankruptcy lawyer. To help you plan for your future, consider utilizing the experience of the Law Offices of Jason R. Moseley. We have years of experience aiding clients in South Bend, Indiana restructure their finances with both Chapter 7 and Chapter 13.

Call us at 574-707-8675 to reach our office in South Bend, Indiana or at 219-472-8391 to reach our Merrillville office.

What Is Chapter 7 Bankruptcy?

In Chapter 7 bankruptcy, a bankruptcy trustee erases several (or all) of your debts. During this time the trustee may also sell or liquidate some of your property to repay your creditors and debt.

Chapter 7 bankruptcy is the liquidation via sale of the debtor’s nonexempt property (these normally include items of value that are not reasonable and necessary) and the distribution of these proceeds to the creditors.

An experienced bankruptcy attorney can explain who is eligible to file, how the entire process works, and what happens to your debts and property.

Chapter 7 bankruptcy begins with a debtor filing a petition with the bankruptcy court. In addition to the petition, the debtor must also file the following items:

  • Schedule of income and expenditures
  • Statement of financial affairs
  • Include a schedule of executory contracts and current leases
  • Debtors must also include tax returns for the most recent tax year and tax returns from prior years since the case began

Are there alternatives to Chapter 7 Bankruptcy?

Yes – you can learn more by clicking here.

Some Pros and Cons of Chapter 7 Bankruptcy


A bankruptcy will stay on your record for years, the time to complete the bankruptcy chapter 7 process – from filing to relief from debt, takes only about 3-6 months. The trade-off is a lasting mark on your credit in exchange for freedom from most of your debt.


Bankruptcy will hurt your credit for some time. A Chapter 7 bankruptcy can remain on your credit report for up to 10 years.

You will lose property that is not exempt from sale by the bankruptcy trustee. You may lose some of your luxury possessions.

You will lose your credit cards. Credit card debt is one of the most common causes of bankruptcy. You may also be able to obtain new credit cards within one to three years of filing bankruptcy. However, typically the interest rates will be at a higher rate.

Bankruptcy will make it difficult to get a mortgage, if you do not currently have one.

Bankruptcy will not erase your student loan debt. Nothing will erase student loan debt.

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One of the primary purposes of bankruptcy is to discharge certain debts to give an honest individual a “fresh start” and another chance. 

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.