Chapter 7 is the easiest and most sought after bankruptcy filling in the United States. Established under Title 11 — Bankruptcy Court, Chapter 7 enables debtors, such as distressed borrowers, to unload all their debts in exchange for a fresh start. Debtor’s assets are collected and liquidated to satisfy outstanding debts depending on rank, amount and priority. Both federal and state laws provide exemptions to protect life style of debtor. Usually, most Chapter 7 cases take anywhere from 3 month to 6 month before debt is discharged.
Depending on the district of filing, certain debts will not be discharged, such as student loans and back owed taxes. Securities securing secured debts, such as real property in mortgage loans, will revert back to the original creditor. Unsecured debt, such as credit card purchases and medical bills, will be dropped unless creditors can demonstrate a pattern of ill intentions and evil doing. Previous judgments and child support payments can be discharged through Chapter 7 bankruptcy.
All discharged debts become invalid releasing debtor from liability of repayment. Creditors of discharged debts can’t pursue debtors for payment or collection. Very rarely, the court may grant an appeal to discharged credit holders. Chapter 7 filers will need to attend and be present at a number of court hearing including question sessions conducted by their creditors.

A Chapter 13 bankruptcy is a debt repayment plan allowing debtors to reconstruct their lifestyle to accommodate a drastic change. Very different from Chapter 7, Chapter 13 requires debtor to repay back a portion of their debt in the form of monthly payments. A trustee is assigned the case to act in favor of the creditors with rights to enforce judgment of debtors who fail in their obligations.
Chapter 13 bankruptcy lasts anywhere from 3 to 5 years depending on the repayment plan. Certain debts will be dismissed while other debts will become part of the payment plan. The payment plan itself varies depending on the current income level maintained by the debtor. Thus, if the debtor’s income increases, the payment amount will increase accordingly.
Chapter 13 allows debtors to maintain certain credit lines open. It also allows debtors to maintain title for secured debts, such as real estate. For distressed homeowners, Chapter 13 filing may save their homes by forcing lenders to accept reduced payments for a certain period of time.
Debtors who used the service of an attorney at law become his/her client until their case is discharged by the bankruptcy court. If a debtor changes his/her address, debtor must notify trustee, his/her attorney, and the court. In a Chapter 13 bankruptcy, debtor carries much of the responsibilities associated with their case.

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