When exploring personal bankruptcy, you will encounter two primary options: Chapter 7 and Chapter 13. Before deciding to file, it's important to understand the differences between the two. Attorney J. Baron Groshon at The Law Office of J. Baron Groshon has been serving the Charlotte area for nearly three decades, providing excellent counseling and representation for people needing debt relief, and explains how these bankruptcy filings differ in North Carolina.

3 Differences Between Chapter 7 & Chapter 13 Bankruptcy in North Carolina

1. Debt Elimination Vs. Debt Reorganization

The most obvious difference between these types of bankruptcy is how they help the filer. Under Chapter 7, most of your unsecured debts will be discharged by the court. Chapter 13 is a debt reorganization plan that restructures your payments so they’re more manageable. While both forms of bankruptcy offer a fresh financial start, they take different paths to that goal.

2. 3–6 Months Vs. 3–5 Years

Chapter 7 and Chapter 13 bankruptcy operate under different time frames. A straightforward Chapter 7 case usually will be completed in 3–6 months, while Chapter 13 can take 3–5 years to finalize. These timelines make Chapter 7 more appropriate for people who have little or no income and need immediate relief from their debts. Chapter 13 is more suitable for individuals who have enough income to make regular repayments over an extended period.

3. Liquidating Vs. Retaining Property

If you’re facing foreclosure on your house, your bankruptcy filing — whether Chapter 7 or Chapter 13 — will issue an automatic temporary stay against it. Chapter 7 filers typically use this time to begin liquidating assets to repay creditors. Chapter 13 filers often elect to make the stay permanent by transferring their mortgage balance to their repayment plan. Before you file, consider how you want to handle the threat of foreclosure; the bankruptcy filing you choose will have a significant impact on what happens to your property.

By knowing the fundamental differences between Chapter 7 and Chapter 13 bankruptcy, you can make the right decisions for your financial future. Rely on The Law Office of J. Baron Groshon in Charlotte, NC, for expert guidance in bankruptcy cases and other legal matters. Call (704) 342-2876 to schedule a consultation with an attorney and visit their website for more information about their services, including estate planning and Social Security disability representation. Visit them on Facebook to stay up to date with news and tips from the firm.