- Chapter 7 liquidates non-exempt assets to pay creditors.
- Filing triggers an automatic stay, but doesn't stop foreclosure permanently.
- Your home could be sold if it’s not protected by a homestead exemption.
- Missed mortgage payments aren’t discharged, so foreclosure may still proceed.
- Chapter 7 doesn't allow for repayment plans like Chapter 13, which may help keep your home.
Chapter 7
- Chapter 13 requires a strict repayment plan for 3 to 5 years, leaving little financial flexibility.
- While foreclosure is paused, you must make ongoing payments or risk losing your home later.
- The plan often includes all disposable income, which can be a financial strain.
- Failure to keep up with payments could lead to foreclosure restarting.
- Unlike Chapter 7, mortgage arrears are not fully discharged, and you must catch up on missed payments.
Chapter 13
- Eligible debtors must be individuals or married couples residing in the U.S.
- Must have a regular income from wages, business operations, benefits, or pensions.
- Combined unsecured debts must not exceed $750,000, and secured debts must not exceed $250,000.
- Debt limits for married couples filing jointly cannot be doubled.
- Ineligible if debtor is a stockbroker or commodity broker.
- Ineligible if involved in a bankruptcy dismissed within the last 180 days after an automatic stay was lifted.
Qualifying
- Eligible debtors must be individuals or married couples residing in the U.S.
- Must have a regular income from wages, business operations, benefits, or pensions.
- Combined unsecured debts must not exceed $750,000, and secured debts must not exceed $250,000.
- Debt limits for married couples filing jointly cannot be doubled.
- Ineligible if debtor is a stockbroker or commodity broker.
- Ineligible if involved in a bankruptcy dismissed within the last 180 days after an automatic stay was lifted.
Qualifying
- Chapter 13 requires a strict repayment plan for 3 to 5 years, leaving little financial flexibility.
- While foreclosure is paused, you must make ongoing payments or risk losing your home later.
- The plan often includes all disposable income, which can be a financial strain.
- Failure to keep up with payments could lead to foreclosure restarting.
- Unlike Chapter 7, mortgage arrears are not fully discharged, and you must catch up on missed payments.
Chapter 13
- Chapter 7 liquidates non-exempt assets to pay creditors.
- Filing triggers an automatic stay, but doesn't stop foreclosure permanently.
- Your home could be sold if it’s not protected by a homestead exemption.
- Missed mortgage payments aren’t discharged, so foreclosure may still proceed.
- Chapter 7 doesn't allow for repayment plans like Chapter 13, which may help keep your home.
Chapter 7
It feels like the easy way out, right? Bankruptcy lawyers will tell you that bankruptcy will solve all of your problems when you're behind on your mortgage, but this isn't true.
Should you Consider Bankruptcy?
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