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Chapter 7 and Chapter 13 address debt in different ways. Chapter 7 may discharge eligible debts after a trustee reviews the debtor’s property and may sell nonexempt assets. Chapter 13 uses a court-approved repayment plan, generally lasting three to five years, and may give an eligible debtor time to catch up on certain secured debts while keeping property. Which route may fit depends on income, assets and equity, debts, prior filings, state law, and the debtor’s goals.
This is a general overview of U.S. federal bankruptcy law, not a personal recommendation. State exemption rules and individual circumstances can change what happens to property and debts. The U.S. Courts’ Bankruptcy Basics pages are general information, not a filing guide or legal advice; a court cannot advise you on which chapter to choose.
Chapter 7 and Chapter 13 at a glance
| Factor | Chapter 7 | Chapter 13 |
|---|---|---|
| Core process | Trustee may liquidate nonexempt property; there is no repayment plan. | Regular payments fund a court-approved plan. |
| Who may qualify | Individuals face a means-test and abuse analysis when applicable. | Individuals with regular income who can propose and fund a plan. |
| Typical timing | Discharge usually occurs about four months after filing, though timing varies. | Plan usually lasts three to five years; discharge generally follows completion of required payments. |
| A central consideration | Whether property is exempt and whether the filing meets statutory requirements. | Whether payments are feasible and whether the plan can address the debts and arrears at issue. |
These are broad distinctions, not guarantees. A Chapter 7 filing does not automatically mean a debtor loses a home or car, and Chapter 13 does not automatically save either one.
How eligibility differs
Chapter 7: the means test is not a simple income cap
For an individual whose current monthly income is above the applicable state median, the means test determines whether the case is presumed abusive. The calculation applies statutory expense allowances and secured-debt payments; it is not based solely on gross income. A presumption may be rebutted only under the statutory standard for special circumstances. Eligibility and the calculation depend on the applicable rules and facts.
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Chapter 13: regular income and a fundable plan
Chapter 13 is intended for individuals with regular income who can make payments under a plan. The U.S. Courts describe the plan period as generally three years for debtors below the applicable median and generally five years for those above it. A court may approve a longer period for cause in the below-median situation, but a plan cannot exceed five years. These descriptions are not a substitute for checking current forms and statutory rules.
What happens to a home, vehicle, and other property
Exemptions matter in Chapter 7
A Chapter 7 trustee gathers property for administration and may sell nonexempt assets, distributing proceeds under bankruptcy law. Exemptions protect some property, but which exemption rules apply and how much protection they provide depend on state law and the debtor’s circumstances. Do not assume a home, vehicle, savings, or other asset is protected without jurisdiction-specific analysis.
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Chapter 13 can provide a way to address arrears
A Chapter 13 plan may let a debtor retain property while making required payments, and in appropriate cases can provide time to catch up on past-due mortgage payments. Whether that is workable depends on the plan, the debt, and the debtor’s ability to pay. A secured creditor’s lien may remain enforceable against collateral even if the debtor’s personal liability for the underlying debt is discharged, unless the lien has been avoided.
Payments, plan length, and discharge timing
Chapter 7
There is no Chapter 7 repayment plan. The trustee administers any nonexempt assets, and an individual debtor may receive a discharge if statutory requirements are met and no exception or disqualifying issue applies. The U.S. Courts’ overview says a Chapter 7 discharge usually occurs about four months after filing; actual timing can vary by case.
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Chapter 13
The debtor makes regular plan payments, usually to a trustee, who distributes money according to the confirmed plan. Depending on claim priority, security, and plan terms, some claims may be paid in full and others in part. Discharge generally comes after required plan payments are completed, commonly after the plan’s three-to-five-year term, if eligibility and other conditions are satisfied.
Which debts may remain after discharge
A discharge releases personal liability for certain debts; it does not make every debt disappear, and it does not by itself erase a valid lien. Depending on the debt and applicable rules, debts that may remain include:
- Certain taxes and domestic support obligations.
- Most government-funded or guaranteed student loans.
- Some fines and penalties.
- Debts connected to certain wrongful conduct.
The outcome can turn on the precise type of debt and, in some cases, timely litigation and court findings. Chapter 13 has a somewhat broader discharge in limited respects, including certain debts for willful and malicious injury to property, some debts incurred to pay nondischargeable tax obligations, and some divorce-related property settlements. These exceptions do not mean Chapter 13 broadly discharges every debt Chapter 7 cannot.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Questions to sort out before comparing chapters
Chapter choice is a fact-specific legal and financial decision. Organize the questions below before seeking advice from a qualified bankruptcy professional:
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- Current Official Bankruptcy Forms
- References to Recent and Notable Case Law
- Latest Statutory Changes to Bankruptcy Code Exemption Amounts
- Income: What income does the applicable means-test calculation use, and would Chapter 13 payments be affordable over the plan period?
- Property and equity: What assets do you own, what equity is in them, and which state or federal exemptions may apply?
- Secured debts and arrears: Are mortgage, vehicle, or other secured payments overdue, and could a plan realistically cure the arrears while keeping up with ongoing obligations?
- Debt types: Which debts are potentially dischargeable, which may survive, and are any liens attached to property?
- Prior bankruptcy cases: Could a prior filing affect eligibility or the availability or timing of a discharge?
- Your goal: Is the priority addressing eligible unsecured debt, protecting particular property, or resolving overdue secured payments?
For authoritative federal overviews, consult the U.S. Courts’ Bankruptcy Basics pages on Chapter 7, Chapter 13, and Discharge in Bankruptcy. Local court procedures, state exemption law, current forms, and the facts of a particular case still matter.
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