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Bankruptcy is daunting enough without the added confusion about the six different chapters: 7, 9, 11, 12, 13, and 15. Because the most common types of personal bankruptcy are 7 and 13 – the former accounting for as many as 65 percent of all cases in the U.S. – we will give a brief but informative review of the difference between them.

Chapter 7, also known as a straight bankruptcy, is pursued by debtors seeking to discharge their obligation to pay debts. If a debtor wants to keep an item that serves as security for a loan (such as a car), he or she must continue to make these payments. If on the other hand the debtor wants to discharge said loan, then he or she must surrender the item to the creditor that holds the security.

Note that Chapter 7 bankruptcy does not discharge or wipe out most taxes, most school loans, child support or alimony.

Chapter 13, by contrast, seeks to reorganize and consolidate debt. Typically unsecured debt, like credit cards, will be paid according to what the debtor has the ability to pay, not necessarily what is owed.  The debt that is not paid according to the reorganization plan will ultimately be discharged or wiped out (note that most long term debt and home mortgages must be paid in their normal monthly payments, either through or outside the plan).

In most instances, the payment plan will be less than the combined payments of the debts prior to filing. Moreover, you can retain all of your assets provided you make the payments as required and maintain insurance on items.

To find out which Chapter applies to you, consult with a professional Fort Lauderdale Bankruptcy Attorney. With an experience Fort Lauderdale Bankruptcy Lawyer by your side, you can navigate this complex world with minimum pain.