BANKRUPTCY LAW IN UTAH: CHAPTER 7 v. CHAPTER 13
Summary: This article compares and contrasts the two major consumer bankruptcy options: Chapter 7 and Chapter 13. Chapter 7 is a liquidating bankruptcy commonly referred to as "fresh start" bankruptcy. Chapter 13 is a debt reorganization option where debtors make a monthly payment for 3-5 years.
- Debtor has little property except for the basic necessities like furniture and clothing.
- Debtor has little or no money left after paying basic expenses each month.
- Most unsecured debts can be discharged (completely eliminated).
- Process moves quickly – you may receive your discharge in just a few months.
- Creditors can’t contact you while the automatic stay is in effect or after debts are discharged.
COMMONLY USED WHEN:
- Debtor has significant equity in a home or other property/assets debtor wants to keep.
- Debtor has regular income and can pay living expenses, but can’t keep up the scheduled payments on debts.
- You can keep most of your property while spreading out time to pay past due accounts.
- You will have 3-5 years to catch up delinquent accounts according to a schedule that you and the trustee have agreed is workable for you.
- You’ll make one monthly payment to the bankruptcy trustee and you will have no direct contact with creditors during the protection period of 3-5 years.
- Co-signers may be protected.
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