Attorney Keith Cothroll also handles consumer bankruptcy matters under Ch. 7 and 13.

Chapter 7 v. Chapter 13

Chapter 7:

The purpose of chapter 7 is to discharge debts and give the debtor a “fresh start.” The discharge extinguishes the debtor’s personal liability on debts. A discharge is available to individuals, not partnerships or corporations.

Although most individual chapter 7 cases result in a discharge of all debts, some types of debts are not discharged, and a discharge does not extinguish liens on property.

In rare cases a chapter 7 may be dismissed as an abusive filing if the court finds an individual has the ability to pay a meaningful dividend to unsecured creditors in a chapter 13 case.

Chapter 13:

Chapter 13 is available to individuals with regular income from any source, not just wages. A sole proprietor is also eligible for chapter 13 relief. The goal is for individuals to reorganize pay creditors though a plan requiring monthly payments for a minimum of three years and no more than five years.

Currently unsecured debts must be $419,275, or less, and secured debts $1,257,850, or less, for an individual to qualify for chapter 13.

Corporations and partnerships may not file chapter 13.
An individual, even if self-employed in an unincorporated business, is eligible for chapter 13 relief as long as the individual’s unsecured debts are less than $419,275 and secured debts are less than $1,257,850.

Corporations and partnerships may not file chapter 13.

To better understand your options, what to expect in court and to learn more about what Attorney Keith Cothroll can do for you, please contact him at 832-402-4440.


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