What is the difference between Chapter 7 and Chapter 13 in Bankruptcy and who qualifies for this?
Who qualifies for a Chapter 7 and how would I know if I do qualify what about chapter 13 who qualifies for this?
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Anybody CAN file Ch 13. Long before the so-called "means test" there have always been people who voluntarily filed Ch 13 bankruptcies even though they would have been able to file Ch 7.
Now (since 2005) some people MUST file Ch 13. Ch 13 is at least a partial repayment plan in which you make monthly payments to a Ch 13 trustee for a period of 3-5 years. The Ch 13 trustee distributes this money to your creditors according to the priorities determined by law. One of the myths about Ch 13 is that you must repay all your debts in full within 5 years. This is not true. Many Ch 13 repayment plans repay only pennies on the dollar. The remainder is then discharged at the completion of the confirmed plan.
In Ch 7, your unsecured debts are discharged, meaning you don’t repay them at all. Although it sounds like nit-picking, this is not exactly the same as having them forgiven. If a debt is "forgiven" then you would potentially owe taxes on the amount of the forgiven debt, because the IRS considers it to be income. When a debt is discharged in bankruptcy, you do not owe income tax on the amount that was discharged.
Chapter 7 is for lucky persons
Chapter 13 is for unlucky persons.
there is a means test that evaluates what you own and what you owe plus you ability to pay you debts — 7 if you qualified you debts are forgiven 13 you debts are just postpone and you are put in a payment plan!!!