The Difference Between Ch 7 & 13

[Sammie]

Happy New Year everyone!

There have been a couple of questions that I have been thinking about and would like to get some answers. Why is it in a Ch 7 that soon after their 341 Meeting their case is Discharged. We are currently in 13 and this is not the case. Can someone explain the differences.

Also, what happens if one or both parties that have filed for Bk. passes away during the payback period? Would the payments just come out of the Estate? Thank you for yor responses. sammie

[LadyInTheRed]

Simply stated, the differences is that a Chap 13 is a reorganization of debt and a Chap 7 is a liquidation of assets in order to pay debt.

In a Chap 13, you pay your disposable income to the trustee for 3 to 5 years and the money is distributed to your creditors. You must complete the 3 to 5 year plan to receive a discharge of the remaining debt. In a Chap 7, whatever non-exempt assets you have on the day you file get liquidated and the proceeds distributed to your creditors. You don't need to pay your income to creditors. So, if there are no objections to your discharge, you get your discharge pretty early. The trustee can then take the time needed to liquidate your assets.

I don't really know the answer to your second question. Here's what the bankruptcy rules say:

Rule 1016. Death or Incompetency of Debtor

Death or incompetency of the debtor shall not abate a liquidation case under chapter 7 of the Code. In such event the estate shall be administered and the case concluded in the same manner, so far as possible, as though the death or incompetency had not occurred. If a reorganization, family farmer's debt adjustment, or individual's debt adjustment case is pending under chapter 11, chapter 12, or chapter 13, the case may be dismissed; or if further administration is possible and in the best interest of the parties, the case may proceed and be concluded in the same manner, so far as possible, as though the death or incompetency had not occurred.

It sounds like a Chap 7 would continue. If it's a Chap 13, it's going to depend on the circumstances whether the case is dismissed or converted or the plan is modified.

[Sammie]

Thank you so much LITR. You are always so helpful & made our transition much easier. sammie

[dmc-2008]

That is kind of a strange question! Do you even know if u are in a 3 or 5 year plan? How can you not know the diff between 7 and 13?
Great second question!

[TheBajan]

That is kind of a strange question! Do you even know if u are in a 3 or 5 year plan? How can you not know the diff between 7 and 13?
Great second question!

At the risk of sounding sarcastic or overly simplistic, we aren't born with innate knowledge of BK. Even though I had spoken to several attorneys, and I got a vague idea that most people preferred to file a chapter 7, I didn't understand why. I didn't really understand the difference between them until after I joined this board. Even then, because a chapter 13 was in our best interest, it took me a while to understand why anyone would prefer to file a 7. According to the sig, Sammie is in a 3 year plan. We all tend to focus our attention on learning about what is pertinent to our own circumstance. The rest is just gravy we pile on after we get what we really need.

Best regards,
The Bajan

[dmc-2008]

Yes but the main diff between the two is debt repay that makes discharge longer.

[lillymarlene]

I'm currently in a chapter 13 myself, with about 2 years to go. I'm suprised by how most people seem to know so little about this type of bankruptcy. For example, my boyfriend's family knows I've filed chapter 13, but still make comments to me like: don't repair that old car, just go get a new one, maybe you could get a payment plan for hearing aids, etc. I have told them, I cannot take on new debt, and I'm "required" to keep my old car for a couple more years, but I guess what I said just went in one ear and out the other.

[frogger]

Also, what happens if one or both parties that have filed for Bk. passes away during the payback period? Would the payments just come out of the Estate? Thank you for yor responses. sammie

A suggestion of death will be filed with the bankruptcy court, and then if death is determined to have happened, the case will be dismissed.

[Sammie]

That is kind of a strange question! Do you even know if u are in a 3 or 5 year plan? How can you not know the diff between 7 and 13?
Great second question!

We are in a 3 yr. plan for 13, & tbh we know nothing about filing chapter 7. Our Attorney told us to file for a 13 and that is the way we went.

At the risk of sounding sarcastic or overly simplistic, we aren't born with innate knowledge of BK. Even though I had spoken to several attorneys, and I got a vague idea that most people preferred to file a chapter 7, I didn't understand why. I didn't really understand the difference between them until after I joined this board. Even then, because a chapter 13 was in our best interest, it took me a while to understand why anyone would prefer to file a 7. According to the sig, Sammie is in a 3 year plan. We all tend to focus our attention on learning about what is pertinent to our own circumstance. The rest is just gravy we pile on after we get what we really need.

Best regards,
The Bajan

Thank you Bajan. sammie

A suggestion of death will be filed with the bankruptcy court, and then if death is determined to have happened, the case will be dismissed.

Thank you frogger. We am not planning on going anywere soon, but I was just curious & figured I would get the answer here faster than calling our Attorney. sammie

[TheBajan]

thank you bajan. Sammie