Eastern PA Bankruptcy Attorneys

The latest Bankruptcy FAQ by the law firm of Newman Williams and bankruptcy attorney Vince Rubino.

Q – What is the difference between the different chapters of bankruptcy (Chapter 7, Chapter 11, etc.)?

A – Most individuals file under Chapter 7 or Chapter 13. Chapter 7 is designed for individuals with limited income and assets who wish to discharge unsecured debts, such as credit cards, personal loans, car loans/repossessions, and medical bills. Chapter 13, which is a monthly payment plan used to repay some amount to creditors, may be used when the assets and/or income of the debtor(s) is/are in excess of what is permitted under Chapter 7. Unsecured creditors are seldom entitled to full payment through a Chapter 13 plan, and in most cases receive only a small percentage of the amount owed. A Chapter 13 is often used to stop a foreclosure action, which can be done as late as the time of the Sheriff’s sale (although we prefer as much advance notice as possible), and cure a mortgage arrearage through the Court-administered payment plan. Chapter 11 is primarily used for corporate reorganizations, and Chapter 12 is designed specifically for family farmers and fishermen who need to reorganize their debts.

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