Chapter 7 vs Chapter 13 Bankruptcy: What's the Difference?
How This Article Was Reviewed▾
How We Review This Educational Content▾
Why You Can Trust This Page▾
Legal Disclaimer
This guide is for educational purposes only and does not constitute legal or financial advice. Federal bankruptcy laws are complex, and choosing between Chapter 7 and Chapter 13 will significantly impact your assets and financial future. Reading this content does not create an attorney-client relationship. You should consult a licensed bankruptcy attorney before making filing decisions.
People thinking about filing bankruptcy are most often considering either chapter 7 bankruptcy or chapter 13 bankruptcy. The chapter that makes the most sense for you will depend on your specific financial picture and goals.
Need Guidance Selecting the Right Chapter?
Don't navigate this complex legal decision alone. Speak with an experienced bankruptcy attorney to evaluate your income, protect your assets, and map out your fresh start.
Income and assets are usually the two main factors that will influence your decision. Income because you must take a means test before you file either chapter. Governed by 11 U.S.C. § 707(b), the means test determines whether you qualify for chapter 7 bankruptcy, and how much certain creditors will need to be paid in chapter 13.
Take Action: You don't have to guess if you qualify. You can run your household income and family size through our free Chapter 7 Means Test Calculator right now to see where you stand against your state's median income.
Those who qualify for chapter 7 may also be able to file for chapter 13 if their income is enough to make chapter 13 plan payments. Chapter 7 qualifiers may opt for chapter 13 for several reasons (which we will discuss below).
Legal Sources: The law behind chapter 7 and chapter 13 is found in 11 U.S. Code Chapter 7 and 11 U.S. Code Chapter 13.
Chapter 7 vs Chapter 13 Decision Tool
We made the chapter 7 vs chapter 13 decision tool below to help you on your journey to finding the best solution for your specific situation. This tool is free to the public. We do not ask for any contact information. You won't be asked for an email, phone number, etc. at the end of the form.
Simply answer the questions below about income, debt and your goals. At the end you will get a summary of which chapter might be a better fit based on your input, broken down into three categories (income, your goals, and your assets). You can save and print your results if you want to keep them for your records, or if you want to share the info with a bankruptcy lawyer.
Chapter 7 vs Chapter 13 Decision Tool
Answer a few questions to get an educational estimate of which bankruptcy chapter may fit your situation.
Step 1 of 2
Window 1 of 2: Income Snapshot
ZIP lookup is optional and used as a quick state check.
Chapter 7 vs Chapter 13 Bankruptcy Overview
The table below highlights some of the main differences between chapter 7 and chapter 13 bankruptcy for individuals and couples (joint filers).
| Category | Chapter 7 | Chapter 13 |
|---|---|---|
| Typical Timeline | Approximately 3–6 months from filing to discharge. | Discharge entered after a 3 to 5 year payment plan. |
| Eligibility Gate | Must qualify under the 11 U.S.C. § 707(b) means test. | Must have regular income & be within current federal debt limits (11 U.S.C. § 109(e)). As of 2026, those limits are $526,700 for unsecured debt and $1,580,125 for secured debt. |
| Unsecured Debt | Dischargeable. No payment plan required. | Dischargeable after 3 to 5 years. Some or all could be paid through the plan. |
| Mortgage Arrears | There is no legal mechanism to catch up mortgage arrears. | Mortgage arrears can be cured through the repayment plan. |
| Car Loans | Keep by staying current, reaffirming, or redeeming (depends on lender). | Arrears can be cured. Loan terms may be adjusted and "crammed down". |
| Non-Exempt Property | Subject to liquidation/sale by the Chapter 7 Trustee. | Generally kept by paying its value to creditors through the plan. |
| Co-Signer Protection | No ongoing protection for non-filing co-signers. | Includes a limited co-debtor stay (11 U.S.C. § 1301) for consumer debts. |
| Credit Reporting | Bankruptcy notation remains on credit reports for up to 10 years. | Bankruptcy notation remains on credit reports for up to 7 years. |
When Chapter 7 Could Be a Better Option Than Chapter 13
You Own Few Assets and Most of Your Debt Is Unsecured
Chapter 7 may be a stronger option for someone with limited property and a large amount of unsecured debt. For instance, a person who rents a home, owns basic personal belongings, drives an older car, and is falling behind on credit cards, medical expenses, or unsecured loans may find that chapter 7 offers more meaningful relief.
My Real-World Experience: The Chapter 7 Fresh Start
"In my practice, I frequently meet clients who are overwhelmed by unsecured debt from medical emergencies or sudden job losses but own very little non-exempt property. When a client's income falls below the state median, they generally pass the means test under 11 U.S.C. § 707(b). In these routine cases, we are often able to secure a Chapter 7 discharge within a few months, allowing them to keep their exempt household belongings while wiping out their qualifying unsecured debt.
*Note: Every bankruptcy case is unique, and outcomes depend entirely on your specific income, assets, and debt structure.*"
You Do Not Have Enough Income to Support a Repayment Plan
Chapter 7 may make more sense when there is not enough income left over each month to fund a chapter 13 plan. Some people are already stretched thin trying to cover housing, food, utilities, transportation, and other necessary expenses. When the budget does not realistically allow for a monthly plan payment, chapter 7 may be the more practical path.
Curious what a Chapter 13 payment actually looks like? Use our Chapter 13 Plan Payment Calculator to estimate your potential monthly commitment based on your specific secured arrears, priority debts, and attorney fees.
You Have High Income but Mostly Business Debt
Generally, high earners are forced into Chapter 13 because of the Means Test. However, there is a powerful exception under federal law: if more than 50% of your total debt is classified as non-consumer debt (such as failed business loans, commercial leases, or personal guarantees for a business), you are exempt from the Means Test entirely. This means business owners can often file Chapter 7 and receive a quick discharge regardless of how high their current household income is.
You Want Relief From Debt Sooner
Chapter 7 may be the better choice when the priority is to eliminate unsecured debt in a shorter amount of time. Someone dealing with heavy credit card balances, medical bills, or older personal loans may prefer chapter 7 because the path to discharge is usually much quicker than it is in chapter 13 (usually 3 to 6 months versus 3 to 5 years).
When Chapter 13 Could Be a Better Option Than Chapter 7
You Need to Catch Up on Missed Mortgage Payments
If you are behind on your mortgage payments for your primary residence, want to keep that home, and need a way to catch up the mortgage arrears, chapter 13 provides a path where you can pay them back through the 3 to 5 year plan. Under the automatic stay provision (11 U.S.C. § 362), Chapter 13 can also be used to stop a foreclosure if those house payments have gotten too far behind.
My Real-World Experience: Utilizing the Stay to Stop Foreclosure
"Chapter 13 is often the most powerful tool I use when a client is facing a fast-moving foreclosure. When homeowners fall behind due to a prolonged illness or hardship, a bank may schedule a foreclosure auction. By filing a Chapter 13 petition, we trigger the automatic stay, which legally halts the sale. However, it is absolutely critical that the foreclosing trustee and mortgage lender receive immediate, documented notice of the bankruptcy filing so they don't accidentally proceed with the auction. Once that notice is confirmed, this crucial pause allows us to propose a 3-to-5-year repayment plan to the bankruptcy court, providing a structured path to catch up on arrears while resuming regular mortgage payments.
*Note: A successful Chapter 13 requires court approval of your plan and strict adherence to the payment schedule.*"
You Need to Catch Up on Missed Car Payments
If you are behind on your vehicle's payments and need a way to catch them up, you can use your chapter 13 plan payments to do that over the life of the plan.
You Need to Protect Property That Might Be at Risk in Chapter 7
If you have property that is not exempt which would be at risk for sale in a chapter 7 liquidation, you could file a chapter 13 and provide payment to creditors for that nonexempt asset in your chapter 13 plan.
Example: Assume you have a recreational vehicle like an RV or boat that has no exemption. In a chapter 7, the trustee could sell this asset and use the proceeds to pay creditors. In a chapter 13, you could keep the asset by paying its value to creditors through your plan payments over time.
Not Sure Which Exemptions Protect Your Property?
Under federal law, you generally must live in a state for at least 730 days to use its specific bankruptcy exemptions. If you've moved recently, figuring out which state's laws apply can be complicated. Use our Bankruptcy Exemption Law Finder to trace your residency history and estimate which state's exemptions you are legally allowed to use. Once you know your state, plug your assets into our Homestead Exemption Estimator or Vehicle Exemption Estimator to see how much of your equity is legally protected.
You Want to Protect a Co-Debtor
If you have a co-debtor, like a friend, family member, or former spouse, who is also obligated on a debt, chapter 13 can protect them from collection actions for some consumer debts during the case through a limited co-debtor stay (11 U.S.C. § 1301). Chapter 7 does not provide this protection.
Which Chapter is Cheaper? (Attorney Fees and Upfront Costs)
One of the most common questions people ask is which chapter costs less. The answer depends on whether you are looking at upfront costs or the total cost over the life of your case.
- Chapter 7 Upfront Costs: Chapter 7 is typically cheaper overall, but attorneys usually require their fees to be paid in full, up front before the case is filed. This can be difficult to pull together when you are already struggling with debt.
- Chapter 13 Upfront Costs: Chapter 13 usually costs more in total attorney fees because the case is highly complex and lasts 3 to 5 years. However, courts often allow the majority (or sometimes all) of those attorney fees to be rolled into your monthly plan payments. This means you can frequently get a Chapter 13 case filed and stop a foreclosure or repossession with much less cash up front compared to a Chapter 7.
Final Thoughts: Chapter 7 or Chapter 13?
As you can see from our discussion and use of the chapter 7 vs chapter 13 tool, the chapter that works for you is always going to be based on your specific situation and what your goals are. There is no one-size-fits-all analysis when it comes to chapter 7 vs chapter 13. The best way to get clear answers is to do your research, and get good, qualified legal guidance from a bankruptcy lawyer if you are unsure.
Explore Bankruptcy Help by State
Browse our state guides to learn exemptions, means test rules, costs, and local procedures. Use these links to jump between states and compare your options.
- Arizona
- California
- Colorado
- Florida
- Georgia
- Illinois
- Indiana
- Maryland
- Michigan
- New York
- Nevada
- Ohio
- Oregon
- Pennsylvania
- Tennessee
- Texas
- Virginia
- Wisconsin