(continued)

2- Differences between Chapter 13 & Chapter 7

The main purpose of a Chapter 13, as opposed to a Chapter 7, is to force certain creditors into a payout set forth in the debtor's proposed Plan, whereas payouts are entirely voluntary with the creditor in a Chapter 7.  A Chapter 13 also enables a debtor to retain non-exempt assets that would otherwise be liquidated by a Chapter 7 Trustee. In most cases, you can keep exempt things like your home and your car, household goods and clothes, under Chapter 7 (provided you keep up any payments owed on them). However, under Chapter 7, you wouldn't be able to keep non-exempt things like rental properties, more than just a few firearms, more than one vehicle per licensed driver, boats, and other luxury items, etc.
The goal of most Chapter 7 bankruptcies is to discharge your existing debts and allow you a *fresh start* on your finances. In other words, once your discharge is granted, you no longer need to repay the unsecured debts that were incurred before you filed your bankruptcy.  You pay secured debts the same as before, unless the creditor voluntarily agrees to a change in a reaffirmation agreement.  Under a Chapter 13, however, you repay as much of your debts as you can, before your slate, so to speak, is wiped clean. And because you repay some of your debts, you gain certain advantages over a Chapter 7.