If you meet the requirements of your plan, your bankruptcy will be discharged and your case closed.
There are a couple of differences between Chapter 7 and Chapter 13 that you should be aware of:
Cosigners: If you have cosigners on accounts who are not filing with you, under Chapter 7 the creditor can go after them almost immediately for payment. Under Chapter 13 your creditors cannot try to collect from cosigners until after it has been determined that you will not be able to pay back the debt in fullusually that’s when your case is over.
Fraud: Under Chapter 7, if a lender can show that the information you gave in your application was false, or you otherwise fraudulently obtained credit, they can try to exclude that debt from your discharge. Credit card issuers in particular are getting more and more aggressive about this, and are looking to stop anyone who might have been on a recent spending spree from just wiping out their debts. Under Chapter 13, they usually must wait until you have completed the repayment plan before they can try to demand payment of the full debt.
Waiting Period: Chapter 7 can be filed every six years. Chapter 13 can be filed as often as you want (as long as the previous bankruptcy has been discharged).
Most consumers, over 80 percent of them, choose Chapter 7 rather than Chapter 13. Unfortunately, there isn’t much incentive for consumers to file Chapter 13 rather than Chapter 7. Few creditors differentiate between the two when evaluating postbankruptcy applications for credit: Either type of bankruptcy can mean an automatic credit rejection. It’s true that most credit bureaus will now remove a Chapter 13 bankruptcy from a credit report seven years from the date of filing, while Chapter 7 stays on for ten years from the date of filing. Still, for some people that may not seem like a great incentive to go through a Chapter 13 plan.
Note that even if you file for bankruptcy and don’t go through with it, the fact that you filed for bankruptcy will appear on your credit file for up to ten years and may harm your chances of getting credit elsewhere. Don’t use filing for bankruptcy as a way to scare a creditor into agreeing to a reasonable payment schedule.
