4312 Ludgate Street, Lumberton, NC 28358 | Toll-Free: 800-808-9695 | Local: 910-739-1010 | Fax: 910-739-0922

Law Offices of Bruce F. Jobe, P.A. - Specializing in bankruptcy law, representing individuals and small business in southeastern North Carolina

Law offices of Bruce of Jobe, P.A.

Debtor FAQ's

What are the main differences between Chapter 7 and Chapter 13?

Chapter 7 is designed to eliminate unsecured debts. Chapter 13 is designed to repay your creditors and keep your assets such as your car or home based on your ability to repay your debts. A North Carolina bankruptcy attorney from the Law Offices of Bruce F. Jobe, P.A., can help you choose which Chapter is best for you, but here is a little more detail:

  • Chapter 7 is a liquidation-type bankruptcy. Under Chapter 7, debtors must give up certain property that they own at the time they file the bankruptcy case, and the property is sold by a trustee. The proceeds of this sale are used to pay creditors. In many cases, the debtor does not have any assets over and above what the law allows the debtor to keep. Therefore, in many Chapter 7 cases, the debtor ends up not having to give up any property at all. After 90 days, most debtors get their debts discharged. Examples of debts that cannot be legally discharged are past-due child support payments, some taxes and student loans. Also, debts for which the debtor has pledged collateral for the loan – for example, cars, homes and household goods – do not go away in a Chapter 7 bankruptcy.
  • In a Chapter 13 bankruptcy, debtors pay out some of their debts over a three- to five-year period. Unlike in Chapter 7, debtors in Chapter 13 usually keep all of their property whether or not it is exempt, and they make regular payments on their debts out of the money earned after filing the bankruptcy case. The plan payments must total at least as much as creditors would have received if the debtor had liquidated under Chapter 7. They payments are made in regular installments to a trustee, who distributes the payments to the creditors. The plan lasts either until the debts are paid in full or until the three- to five-year period ends. The debtor then receives a discharge at the completion of the plan.

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Law Offices of Bruce F. Jobe, P.A.
4312 Ludgate Street
Lumberton, NC 28358
Phone: 910-739-1010