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Is It Easier To File For A Chapter 7 Than A Chapter 13 Bankruptcy?

Technically, a Chapter 7 is probably easier as far as the paperwork and the time whereas a Chapter 13 is more involved because it requires preparing a plan and then analyzing whether you can pay everybody off. A Chapter 13 is longer, averaging from three to five years. A Chapter 7 bankruptcy, from the time that you file it till it’s over, generally lasts between 90 days to three months. It can last longer if there is an asset or there are issues regarding discharge of debts.

Which Chapter Of Bankruptcy Is Better For Someone’s Credit Score?

When you do either one of them, they’re both noted on your credit report. If you’re doing a 100% payback under Chapter 13, you might find that it is a little bit better, when it comes to your credit score, because you’re paying people back in full or almost in full even though it’s through bankruptcy versus Chapter 7, which discharges or wipes your debts out entirely. The truth, though, is that either bankruptcy goes on your credit report; but it most likely does not have a huge effect anyway since most people, when they go bankrupt, have already taken the plunge, and they’re having a problem with their credit to begin with.

How Long Does The Chapter 13 Bankruptcy Process Typically Take From Start To Finish?

There is no exact time frame for a Chapter 13 bankruptcy because you could, technically, finish one in a few months, depending on the amount of your debt. There have been some that last a year or two years, but typically most of them run from three to five years.

Does Filing For A Chapter 13 Immediately Stop Creditors From Trying To Collect A Debt?

Yes. When you file Chapter 13, it is done electronically, so you can send the report to your different creditors immediately; and once they know about it, they have to stop the collections process. There is an automatic stay that goes into effect, which should stop any lawsuits or creditors that are trying to enforce or collect a debt.

Can Collection Activities Begin Again If I miss A Payment Under The Chapter 13 Plan?

No. Typically, as long as your Chapter 13 case remains pending and your stay is still in effect, they can’t just start collection activities again. They generally have to file a relief from the automatic stay to get permission to begin collecting it. So missing a scheduled payment, in and of itself, is not enough. If your case gets dismissed, it allows collection to begin again but not from just simply missing a scheduled payment.

How Is A Chapter 13 Bankruptcy Different From Private Debt Consolidation?

A private debt consolidation service is voluntary, so they have you agree to pay something; however, the creditor might change their mind since you can’t force a creditor to accept something. A Chapter 13 is under the auspices of the bankruptcy court. You don’t ask permission of your creditors; as long as you meet the requirements of the Chapter 13 plan, the creditors must accept the plan.

You are not asking your creditors to agree to the plan in a Chapter 13 bankruptcy: you’re saying, “Look, if I comply with all that I’m supposed to, you must accept this,” so that forces creditors to stop any foreclosures, lawsuits or debt collections. In this way you have the power and the enforcement of the court to protect you. Private consolidation is all voluntary so creditors usually have more of a say and can decide to accept or not accept a payment plan.

For more information on Chapter 7 Vs. Chapter 13 Bankruptcy, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling (210) 734-5725 today.

Guillermo A. Flores, Esq.

Get your questions answered - Call for a free consultation - (210) 734-5725

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