Is Chapter 7 more common than Chapter 13?

Is Chapter 7 more common than Chapter 13?

| Oct 22, 2020 | Chapter 13

When it comes to filing for bankruptcy, you have many issues to take into consideration if you are struggling with debt. It is important to understand how Chapter 13 differs in comparison to Chapter 7 and make sure you move forward with the strategy that makes the most sense given your unique circumstances. In fact, many people decide to file for Chapter 7 bankruptcy.

Before moving forward with a Chapter 7 petition, it is crucial to understand the different effects of this strategy and ensure that you approach the process correctly.

Reviewing the prevalence of Chapter 7

According to the United States Courts’ website, there were far more Chapter 7 consumer bankruptcy cases in comparison to Chapter 13 during 2017. Over the course of this year, over 740,000 individuals filed for bankruptcy protection. In fact, roughly 61 percent of these bankruptcies were Chapter 7 cases, while only about 38 percent of these individuals filed for Chapter 13 protection. Chapter 7 bankruptcy involves the liquidation of a borrower’s assets with non-exempt proceeds split up among creditors. On the other hand, Chapter 13 cases involve payment plans that span the course of years and allow debtors to retain some assets.

Reviewing statistics on the duration of Chapter 7

In 2017, the mean time interval for Chapter 7 bankruptcies was 199 days from the filing of a Chapter 7 petition to the point of closing. It is important to take time into consideration as you approach the bankruptcy process and think about how this major decision will affect various aspects of your life, from your personal relationships to your career.