Hello my name is Laura Zaro and I’m a bankruptcy attorney at Zaro Law. One of the first things I explain to new clients, once I determine that they would benefit from filing bankruptcy, is whether they qualify for a Chapter 7 or a Chapter 13. Some major differences between a Chapter 7 and a Chapter 13 are the length of time you’re in the bankruptcy, and whether you have to pay back any of your creditors. 

First, there’s a Chapter 7- which is pretty short, it’s only about 3-4 months from start to finish, and generally wipes out your unsecured debt (which is credit card bills, medical bills, collections, personal loans). All of that is generally wiped out in a Chapter 7. 

Then there is a Chapter 13 bankruptcy- which is basically a three to five year payment plan, where you make a monthly payment to a bankruptcy trustee that goes to pay back a portion of your creditors. Then whatever debt is not paid at the end of three to five years, is wiped out in the bankruptcy. 

So to determine if someone qualifies for a Chapter 7 or a Chapter 13, there are two major things that i look at- that is their income and their assets. So first I look at their income- basically if somebody makes below a certain amount of money (based on their household size), they generally qualify for a Chapter 7. However, if their income is above a certain amount, they generally need to file a Chapter 13 and pay back some of their creditors. 

The other thing I look at is the assets that they have- things like a home, car, etc. In a bankruptcy there is a certain amount of property that we can protect- if we are able to protect all of your assets, you generally qualify for a Chapter 7. However, if somebody has an asset, like a house with $100,000 of equity, they would not qualify for a Chapter 7 in Oregon and would need to file a Chapter 13 and pay back some of their creditors. 

That is just an overview of the major differences between a Chapter 7 and a Chapter 13. What Chapter someone qualifies for depends on a number of factors; the best thing is to set up an appointment with our office so we can determine the best option for you.