Many people have heard of the terms Chapter 7 and Chapter 13, but don’t know exactly what the differences are between the two.

In a Chapter 7, you are asking the bankruptcy court to get rid of most of the debts you owe. However, the trustee may have to take some of your property in order to sell it and distribute the sale proceeds to your creditors. Some of your property may be exempt, which means that the trustee cannot take the property and sell it. The property that you can exempt varies based on the state you are filing in and can sometimes be affected by where you have previously lived.

In a Chapter 13, you are establishing a payment plan for paying some or all of your debts over the next 3 to 5 years. The payment plan is based on your monthly income, how much you owe, and the types of property involved. At the end of your payment plan and assuming you made all of your payments on time, the bankruptcy court grants a discharge of your debts. Usually, unsecured creditors (for example, a credit card) receive a small percentage of the actual amount owed and then the rest of the debt is discharged as part of the bankruptcy.

There are some debts that survive bankruptcy and it doesn’t matter whether you have filed a Chapter 7 or a Chapter 13. Child support, most tax debts, and student loans are, for the most part, nondischargable in bankruptcy – meaning, the bankruptcy court will not eliminate these debts as part of your bankruptcy filing and you will still owe them.

This is just a general overview of the differences between Chapter 7 and Chapter 13. There are many other differences that affect your decision to file bankruptcy and you should contact an attorney or read the U.S. Bankruptcy Court website for further information.

People who are considering bankruptcy often wonder just how much it is going to cost them to actually file bankruptcy.  While attorneys charge a range of fees for Chapter 7 and 13 bankruptcies, the court filing fees are established and set by the U.S. Bankruptcy Court.

In the Northern District of California, the Bankruptcy Court has a website outlining the fee schedule for filing and changes.

For a Chapter 7, the court fee to file the petition is $299.  This amount is due to the court on the day your bankruptcy petition is filed.  There are some circumstances that allow for payment of the court fee in installments and an application has to be filled out an approved by the court.  After the installment application is approved, the court sets a fee payment schedule for the balance of the fees.  If you cannot afford to pay the filing fee at all in a Chapter 7, there are special procedures to follow to receive a waiver of the filing fee.  I’ll cover these special procedures in a future blog post.

The court filing fee in a Chapter 13 is currently $274.  There is not a waiver of the filing fee available in a Chapter 13 bankruptcy.  Again, the entire fee must be paid when your petition is filed.

This is just a general overview of the basic fees involved with a consumer bankruptcy.  There are other fees that may apply to your individual situation and you should contact an attorney or read the U.S. Bankruptcy Court website for further information.