Chapter 7 bankruptcy is a liquidation bankruptcy option, often referred to as a fresh start. In a Chapter 7 bankruptcy filing, the individual, partnership or corporation has no way to repay their debt or salvage their dismal financial situation.
The bankruptcy court trustee will liquidate – completely sell off – all of the assets belonging to the Chapter 7 bankruptcy filer and use all of the proceeds to pay back creditors.
In Chapter 7 liquidation there are some types of property or assets that will be exempt from sale. Consult with an experienced bankruptcy lawyer, such as the bankruptcy attorneys at The Frutkin Lawfirm, PLC, in Phoenix, Arizona, to determine which of your property may be exempt.
Chapter 13 bankruptcy is for an individual to enter into court protection while they repay some or all of their debts. The Chapter 13 bankruptcy filing is for individuals that are overwhelmed by debt, but may not meet the standards for a Chapter 7 filing.
In a Chapter 13 repayment plan, the debtor works with the court to determine which debts will be repaid, what amounts will be repaid, and over what period of time. In exchange for the court supervision, the Chapter 13 bankruptcy filer receives court protection from creditors and cannot be further harassed or sued.
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