Bankruptcy can be a complex and challenging process. If you’re in Topeka and considering filing for bankruptcy or are already in the midst of it, understanding the nuances between Chapter 7 and Chapter 13 bankruptcy is crucial. As seasoned bankruptcy lawyers in Topeka, we’re here to help you navigate this intricate legal journey.
The Treatment of Assets in Bankruptcy
A significant difference between Chapter 7 and Chapter 13 bankruptcy lies in how the debtor’s assets are managed. In a Chapter 7 bankruptcy, the debtor is required to surrender all nonexempt assets to a trustee. This trustee then liquidates these assets to repay creditors. On the other hand, Chapter 13 bankruptcy allows the debtor to retain their property, but they must adhere to a court-approved plan to repay creditors from their future income.
Modifying Debt Obligations in Bankruptcy
Another key distinction is the debtor’s ability to modify their debt obligations. Under Chapter 13, the debtor has the power to alter the rights of secured and unsecured creditors and cure any default within a reasonable time. This flexibility is not available under Chapter 7.
Dischargeability of Debt in Bankruptcy
The dischargeability of certain types of debt can also differ between the two types of bankruptcy. For instance, student loan debt is generally not dischargeable in Chapter 7 bankruptcy unless the debtor can demonstrate “undue hardship” under the Brunner test. However, under Chapter 13, the debtor may be able to repay a portion of the student loan debt through the repayment plan, and then receive a discharge of the remaining debt at the end of the plan period.
Legal Authority and Case Law
Several cases discuss the differences between Chapter 7 and Chapter 13 bankruptcy. For example, In re Davis, 16 B.R. 473 (D. Kan. 1981), discusses the debtor’s power to modify debt obligations under Chapter 13. Similarly, McDaniel v. Navient Sols. (In re McDaniel), 973 F.3d 1083 (10th Cir. 2020), discusses the process for filing a Chapter 13 bankruptcy petition.
Trust in Professional Guidance
When it comes to bankruptcy, it’s vital to have a dedicated and professional attorney by your side. As experienced bankruptcy lawyers in Topeka, we’re here to provide you with the legal counsel you need. We’ll help you determine the most appropriate course of action for your unique financial situation. Trust us to guide you through this complex process.