Chapter 13 Bankruptcy

This article will discuss the standard for discharging student loan debt and the heightened standard that applies to borrowers located within the Seventh Circuit’s jurisdiction.  

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In this article, we explain when it makes sense to file a Chapter 13 bankruptcy rather than a Chapter 7 bankruptcy. We will answer the following questions:  (1) “what is the difference between a Chapter 13 Bankruptcy and a Chapter 7 bankruptcy?” (2) “when does it make sense to file a Chapter 13 bankruptcy rather than a Chapter 7 bankruptcy?,” and (3) “what are the eligibility requirements for a Chapter 13 bankruptcy?”

In a Chapter 13 bankruptcy, the debtor pays off some or all of his or her debt through a payment plan over the course of either 3 or 5 years.  This is different from a Chapter 7 bankruptcy, in which the debtor’s assets are collected and used to pay creditors, while any remaining debt is immediately discharged.  For more information about the differences between Chapter 13 bankruptcies and Chapter 7 bankruptcies, eligibility requirements for Chapter 13 bankruptcies, and the situations in which Chapter 13 bankruptcies are preferable to Chapter 7 bankruptcies, check out our article: When Does it Make Sense to File a Chapter 13 Bankruptcy rather than a Chapter 7 Bankruptcy.