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Navigating the bankruptcy process can be very difficult. The first big question to get resolved is whether you should file for a Chapter 13 Bankruptcy or a Chapter 7 Bankruptcy. This guide provides some of the significant differences and benefits to each you should consider.

*Usually a 3 month process versus a 3-5 year process with Chapter 13.

* If granted, your liability on most debts will be completely discharged – forever.

* The filing of a Bankruptcy Petition provides an automatic stay against most creditors – meaning they can’t hassle you or take further collection attempts pending the outcome of your Petition.

*You may be able to use certain federal or state exemptions to keep a lot of your property.

*You can oftentimes buy back any nonexempt assets from the Trustee at an agreed upon amount.

*You will have to attend the “meeting of creditors.” However, that is almost always the only appearance you have to make. Your lawyer will be there with you.

The MEANS TEST must be met before you have a possibility of getting debts discharged under Chapter 7. This test and more information can be found at


•You will likely be allowed to continue operating a business, unlike in a Chapter 7 wherein you may be required to close up shop.

•Chapter 13 can allow the discharge of certain debts that are non-dischargeable in a Chapter 7.

•If you have obtained a discharge from a Chapter 13 you can seek another Chapter 13 discharge in 4 years versus 8 years in a Chapter 7.

•Based on your gross average income over the 6 months before you file you may be able to pay your debts over a 3 years versus 5 years.

•If you can’t complete your Chapter 13 plan as written you can ask the Court to modify it. So long as it is clear that you are acting in good faith there is a likelihood that the Court will approve your request.

•While most of your debts will not be discharged in a Chapter 13 Plan, your debts will be consolidated into 1 payment and payable to the Trustee. Also, your ability to retain your assets is significantly greater in a Chapter 13 than a Chapter 7.

Like Chapter 7, Chapter 13 has an initial test to determine whether you might qualify from an adjustment of your debts.  See link for this test below.

Author of this guide:

Kimberly Morse Canova
Licensed Attorney Since 1992

Call the attorneys at Canova Law Firm to discuss the remedies available to you regarding bankruptcy.  Our initial 45 minute consultation is free.  Call (479)-442-5800 to schedule your appointment.