Bankruptcy Comparison Chart

  Chapter 7 Bankruptcy Chapter 13 Bankruptcy
Type of Bankruptcy Liquidation or a “Fresh Start” that Wipes Clean Most Debts Repayment Plan, Based on What You Can Afford Per Month, That Pays Creditors a Percentage of the Debt
Who Can File? Individuals and Business Entities Individuals Only (Including Sole Proprietors)
Eligibility Restrictions Disposable Income Must Be Low Enough to Pass the Chapter 7 Means Test Cannot Have More Than $383,175 of Unsecured Debt or $1,149,525 of Secured Debt
How Long Does It Take to Receive a Discharge? Typically Three to Five Months Upon Completion of All Plan Payments (Usually Three to Five Years)
Allows Removal of Judgment Liens from Real Property? Yes, Can Remove Most Judgment Liens, but Chapter 7 Cannot Alter, Slow, or Remove Mortgages Yes, Chapter 13 Can Remove Second Mortgages That Impair The Debtor’s Exemption. Pay a Low Percentage of The Second Mortgage Balance Back
Allows Reducing of Vehicle Loan Balances to the Fair Market Value (FMV) of the Vehicle? Yes, Redeem The Vehicle Through 11 U.S.C. § 722 By Paying The FMV Of The Vehicle With Cash or A Loan (Offered By Lenders Such As 722 Redemption Funding, Inc.) Yes, Chapter 13 Can “Cramdown” The Car Loan Balance Down to The FMV of The Vehicle if The Vehicle Was Purchased Over 910 Days Ago

*This chart is for informational purposes only and does not constitute legal advice nor does acceptance of it create an attorney-client relationship with The Southard Law Firm, LLC. Please contact The Southard Law Firm, LLC, for a detailed explanation on how bankruptcy can work for you.