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The Differences Between Chapter 7 and Chapter 13 Bankruptcy

Interviewer: For people who don’t know, what is the fundamental difference between the two?

Adam: One of the biggest issues is that Chapter 7 is a complete and comprehensive debt forgiveness and Chapter 13 is a structured bankruptcy that requires the debtor filing to continue paying some of the outstanding debts. In Chapter 7 bankruptcy, there is also one big issue regarding whether the debtor has a “means tester.” The person has to make under a certain amount of money in order to qualify for Chapter 7 bankruptcy, because in all honesty it is the best way to go if you can get rid of all of the debt.

Your Income Must Be Under a Certain Level to Qualify for Chapter 7 Bankruptcy

Interviewer: I was going to ask you in Chapter 7, you try to get rid of all of your debts and in Chapter 13 you have to pay them back maybe even though it is a reduced amount, why would anyone want to file a `13? It sounds like a ‘7 is always more advantageous overall.

Adam: It is, but like I mentioned, they have to make sure that they meet the specified criteria, which is earning under a certain amount of income per year, in order to qualify to file Chapter 7.

By Adam Hunt

Ohio Criminal Defense Attorney Adam Hunt
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