Dallas Bankruptcy - Chapter 7 vs. Chapter 13

A Chapter 7 bankruptcy is basically straight liquidation.  Once find out you are eligible for a Chapter 7 bankruptcy by completing the Means Test and your bankruptcy attorney files your bankruptcy schedules, you then file your case and go to your meeting of creditors. 

All non-exempt assets are sold in order to pay a portion of what you owe.  Approximately four to six months after filing all of your debt is discharged.  There are no further payments to any unsecured creditors.  Your debt is wiped clean.  However, payments on unsecured debt, such as home and car loans, must still be made if you don’t want to lose them.

Chapter 13 bankruptcy is very different from Chapter 7 bankruptcy.  With a Chapter 13 filing, you agree to a payment plan.  Your debt is reorganized and paid on for up to three to five years.  People who have too much income to qualify for a Chapter 7 bankruptcy according to the Means Test qualify for this type of plan. 

The Means Test was created by Congress in order to push people who make a sizable income away from filing a Chapter 7 bankruptcy and into Chapter 13, the re-payment plan.  Trying to get out of paying on your debt when you are capable of doing so is considered an abuse of bankruptcy law.