The main difference in Chapter 7 vs. Chapter 13 is speed versus structure. Chapter 7 is a relatively quick “fresh start” that can wipe out many unsecured debts in a matter of months, while Chapter 13 is a three-to-five-year repayment plan that often helps people keep a home or car and catch up on missed payments. Which one fits depends mostly on your income, your property, and what you are trying to protect.

What is the difference between Chapter 7 and Chapter 13 bankruptcy?

Chapter 7 is often called “liquidation” bankruptcy: a court-appointed trustee may sell non-exempt property to pay creditors, and many remaining unsecured debts, such as credit cards and medical bills, can then be discharged (legally wiped out). Chapter 13 is a “reorganization”: you keep your property and repay part of your debts through a court-approved plan.

In practice, many Chapter 7 filers lose little or nothing, because the law lets you protect certain property through exemptions (legal protections for specific assets, up to set limits). In Chapter 13, the trade-off is time: you make monthly payments to a Chapter 13 trustee, usually for three or five years, before receiving a discharge.

Chapter 7 vs. Chapter 13 at a glance

What is the bankruptcy means test?

The means test is a federal formula that decides whether your income is low enough to file Chapter 7. If your household income is below the median for a household of your size in your state, you generally qualify; if it is above, you complete a longer calculation of allowed expenses to see whether you have enough “disposable income” to repay creditors.

Median income figures and allowed expense standards are updated several times a year. The U.S. Trustee Program publishes the current tables at justice.gov/ust/means-testing; the figures that apply are the ones in effect on the date your case is filed. Because the numbers change, the right answer for you depends on your actual paystubs and household size at the time of filing.

If you do not pass the means test, Chapter 13 is often still available. People with higher income can use it to repay what they reasonably can and still discharge the balance of many debts at the end of the plan.

How long does Chapter 7 take compared to Chapter 13?

A typical Chapter 7 case often takes about four to five months from filing to discharge. The meeting of creditors (a short hearing with the trustee, usually held by phone or video) is generally set 21 to 40 days after filing, and the discharge commonly issues 60 to 90 days after that meeting if no one objects.

Chapter 13 lasts much longer because the discharge comes only after you finish the plan. If your income is below your state’s median, the plan is generally three years; if it is above, the plan generally must be five years. No plan may run longer than five years.

Can I keep my house or car in Chapter 7 or Chapter 13?

In many cases, yes, in either chapter, as long as you can protect your equity with exemptions and keep up with payments. Chapter 13 is often the better tool if you are behind on a mortgage or car loan, because it can let you spread the past-due amount over the life of the plan while you stay current going forward.

Chapter 7 can work well when you are current on your payments and your equity is fully covered by exemptions. Exemption amounts vary by state and by which exemption system you use. For a closer look at Maryland, D.C., and Texas rules, see: Will I Lose My House or Car If I File for Bankruptcy?

How long does bankruptcy stay on your credit report?

Federal law allows a bankruptcy to appear on your credit report for up to 10 years from the filing date. In practice, the major credit bureaus generally remove a completed Chapter 13 after seven years, while Chapter 7 can remain for the full ten.

Many people find their credit begins improving sooner than they expect, because their debt load drops and late payments stop accumulating. Rebuilding is gradual, and results vary from person to person.

How much does it cost to file Chapter 7 or Chapter 13?

The federal court fee is currently $338 for Chapter 7 ($245 filing fee, $78 administrative fee, and $15 trustee surcharge) and $313 for Chapter 13 ($235 filing fee plus the $78 administrative fee). Courts may allow you to pay in installments, and in Chapter 7 some lower-income filers can ask the court to waive the fee.

Attorney fees are separate. Our firm handles consumer bankruptcy for flat fees starting at $1,100, plus the court filing fee, so you know the cost before you commit. In Chapter 13, part of the attorney fee is often paid through the plan.

How often can you file for bankruptcy?

You can file again, but there are waiting periods before you can receive another discharge. Generally, you must wait eight years between Chapter 7 filings, four years after a Chapter 7 filing to get a Chapter 13 discharge, and two years between Chapter 13 filings. The waiting period to file Chapter 7 after a Chapter 13 is six years, with some exceptions.

These periods are counted between the filing dates of the two cases, not the discharge dates. Filing again too soon can also limit the protection of the automatic stay. For more, see: How Bankruptcy Can Stop Foreclosure, Garnishment, and Creditor Lawsuits

What courses do you have to take to file for bankruptcy?

Everyone filing Chapter 7 or Chapter 13 generally must complete two short courses from approved providers. The first, credit counseling, must be taken within 180 days before filing. The second, a debtor education (personal financial management) course, must be completed after filing and before discharge.

Both courses are usually available online or by phone and take a couple of hours. The U.S. Trustee Program keeps a list of approved providers by state. Skipping the second course can mean your case closes without a discharge.

Does it matter whether I live in Maryland, D.C., or Texas?

The type of bankruptcy works the same everywhere, because bankruptcy is federal law. What changes by location is the means test median income, and, most importantly, which exemptions protect your property.

Maryland requires debtors to use Maryland’s own exemptions. D.C. and Texas debtors can generally choose between their local exemptions and the federal list. Texas is known for an unlimited-value homestead exemption, subject to acreage limits. These differences can make one chapter more attractive than the other for the same household.

Frequently asked questions

Can I switch from Chapter 13 to Chapter 7?

Often, yes. A debtor can generally convert a Chapter 13 case to Chapter 7, for example after a job loss that makes plan payments unaffordable, as long as they qualify for Chapter 7 at that point. Conversion has its own filing fee and paperwork.

Does Chapter 7 or Chapter 13 get rid of student loans?

Usually not. Student loans are generally not discharged in either chapter unless you show “undue hardship” in a separate proceeding within the case. Chapter 13 can sometimes provide breathing room while the plan is active.

Do married couples have to file together?

No. Spouses can file jointly or separately. A joint filing uses one fee and one case, but the right choice depends on whose name is on which debts and on property ownership, which varies by state.

Which debts can’t be discharged in bankruptcy?

Common examples include most recent taxes, child support and alimony, most student loans, and debts from fraud or certain court fines. Chapter 13 discharges a slightly broader range of debts than Chapter 7.

Talk it through with us

Choosing between Chapter 7 and Chapter 13 is one of the most important decisions in a bankruptcy, and it usually comes down to details: your income, your equity, and whether you are behind on anything you want to keep. We are glad to walk through your options calmly and in plain English.

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We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.

This article is general information, not legal advice. Reading it does not create an attorney-client relationship.