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Choosing between Chapter 7 and Chapter 13 bankruptcy

On Behalf of | Mar 1, 2024 | Bankruptcy

Many people struggle with money in South Carolina. If you are one of them, you might be considering bankruptcy.

Two common options are Chapter 7 and Chapter 13. Each has its own set of benefits and considerations.


Liquidation bankruptcy is another term for Chapter 7 bankruptcy. It offers a relatively swift resolution and liquidates nonexempt assets to repay creditors.

The means test typically determines eligibility for Chapter 7 bankruptcy. If your income falls below this threshold, you may qualify.

Chapter 13 bankruptcy involves creating a repayment plan to gradually pay creditors over three to five years. Income and the ability to follow a repayment plan are the main eligibility considerations.

Asset protection

Chapter 7 bankruptcy may require individuals to liquidate certain assets to repay creditors. However, you may be able to keep assets, depending on factors such as the amount of equity in your home.

Chapter 13 bankruptcy allows individuals to retain their assets while repaying creditors through a court-approved repayment plan.

Debt discharge versus repayment

Chapter 7 bankruptcy usually results in the discharge of qualifying unsecured debts, such as credit card debt and medical bills, within a few months of filing. This offers a fresh start for individuals to rebuild their finances.

Chapter 13 bankruptcy involves a court-approved repayment plan. People make monthly payments to a trustee who distributes funds to creditors. This may require a longer commitment.

If you find yourself struggling financially, thinking about both types of consumer bankruptcy is one step toward a more stable financial future.