Which is better: a Chapter 7 or a Chapter 13 Bankruptcy? The answer is not that simple – and for a good reason.
While both narratives point to the inability of an entity to fulfill its financial obligations, there are key differences between Chapters 7 and 13. Instead of finding which is better among the two, the most suitable strategy is to understand the entity’s case by itself and evaluate which chapter can address the concerns.
To start with, Chapter 7 bankruptcy is a liquidation type while Chapter 13 focuses on reorganization. Individuals and business entities can file for Chapter 7 while only individuals or sole proprietors can do so for Chapter 13.
Chapter 7 can be beneficial as qualified debts can be discharged – giving them a fresh start immediately – which is upon completion within three to four months. However, there are no ways to catch up on missed payments or avoid foreclosure of properties.
Chapter 13 can be advantageous as the individuals can keep their property and catch up on missed mortgages or other payments. Discharge is done upon completion of all plan payments which may be a drawback for some.
Learn more about bankruptcy proceedings from your trusted Law Firm in Laurel, Maryland.
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