Chapter 13 versus Chapter 7 Bankruptcy
We have provided the following questions and answers in hopes that it will give you some basic guidance as to which bankruptcy option is a better fit for your situation. If you would like further guidance on your bankruptcy situation, do not hesitate to contact the lawyers at Anderson & Associates, L.L.C. who handle both Chapter 7 and Chapter 13 bankruptcy, and are willing to travel anywhere in Minnesota to meet with you.
What if I'm behind on my mortgage or car loan?
| Chapter 13 | Chapter 7 |
| You can repay the arrears through your plan, over three to five years, and keep the house or car, so long as you keep current on the existing monthly payments. If it's feasible to pay off the entire loan before the end of your plan, you may be able reduce the amount you have to pay. | You'll probably have to either give the house or car back to the creditor or arrange to pay its wholesale value in full during your bankruptcy case. |
How does Chapter 7 and Chapter 13 effect my nonexempt property?
| Chapter 13 | Chapter 7 |
| You keep all of your property. | You must give it up, pay the trustee its fair market value or, if the trustee agrees, swap exempt property of equal value for it. |
What if I have co-debtors on personal loans?
| Chapter 13 | Chapter 7 |
| The creditor may not seek payment from your co debtor for the duration of your case. | The creditor will go after your co-debtor for payment. |
What if I have filed bankruptcy in Minnesota in the last 6 years?
| Chapter 13 | Chapter 7 |
| No problem; you can file anytime. | You can't file for Chapter 7 unless the recent bankruptcy was a Chapter 13 case, and you repaid at least 70% of your debts. |
Can I want to keep secured property by paying the creditor its value?
| Chapter 13 | Chapter 7 |
| You pay its replacement value (with interest) over time through your plan. | You pay the wholesale value in a lump sum. |
What if I owe child support, alimony, student loans, court-ordered restitution or criminal fines, taxes less than 3 years past due, or debts arising from injuries arising from my DWI?
| Chapter 13 | Chapter 7 |
| These debts must be paid in full in your Chapter 13 repayment plan or you will owe a balance at the end of your bankruptcy. | These debts cannot be erased in Chapter 7 bankruptcy. |
What if I owe nonsupport debts under a property settlement, agreement or divorce decree?
| Chapter 13 | Chapter 7 |
| If you do not pay them in full during your Chapter 13 bankruptcy, the balance is wiped out at the end under Chapter 13 bankruptcy's "superdischarge." | If your ex-spouse or another creditor objects, these debts are not discharged unless you prove to the court that: •· you will be unable to pay these debts after your bankruptcy case, or •· the benefit you will get by discharging the debts will outweigh any detriment to your ex-spouse. |
Can I file bankruptcy in Minnesota if I have debts related to: larceny, theft, breach of trust, embezzlement, fraud or willful and malicious injury to another's property?
| Chapter 13 | Chapter 7 |
| If you do not pay them in full during your Chapter 13 case, the balance is wiped out at the end under the superdischarge. | These debts are not dischargeable if the creditor objects and proves your bad act to the court. |