One of the first questions any Mississippi resident may have about personal bankruptcy is what is the difference between Chapter 7 and Chapter 13 bankruptcy? Both types are used by individuals to obtain debt relief and a fresh financial start. However, there are key differences between the two that many debtors are unaware of until they are pondering bankruptcy for themselves.
In short, Chapter 7 allows a debtor to liquidate most of his or her debts. Chapter 13, on the other hand, involves a repayment plan that is approved by one's creditors. Since neither type of bankruptcy appears favorable on one's credit report, some may assume that Chapter 7 is always the more financially beneficial option. After all, if one is drowning in overwhelming debt, liquidation may appear more manageable than repayment.