Bankruptcy Filing Center

Chapter 7 Vs Chapter 13:
What’s Best for You?

Chapter 7 and Chapter 13 are the most common solutions for people in debt that don’t have any other solution to reduce or eliminate it. Chapter 7 can be used for both personal and business bankruptcy’s. Chapter 13 only applies to a personal or sole proprietor bankruptcy case.

What are some of Key the differences between chapter 7 and chapter 13?

These two bankruptcy types work are very different and there are even more factors that distinguish each of them than listed below.

Chapter 7 bankruptcies:

  • Can be used both by individuals and businesses
  • Require the liquidation of nonexempt assets but may allow you to keep your car or home
  • Require a low disposable income to be approved
  • Usually have a time limit of up to five months to be completed
  • Have the advantage to clear debts faster although at the cost of all nonexempt assets

After filing for a chapter 7 bankruptcy the trustee will officially start the process of selling your nonexempt assets to repay debts, including nonexempt properties and cash. The chapter 7 process will stop collection payments and law suits. This will give you relief from debt collectors, lawsuits and most creditor harassment.

Chapter 13 bankruptcies:

  • Can be used only by individuals or sole proprietors
  • Can preserve your assets to give you a better chance to get back on your feet faster
  • Will provide you with a court approved timeline to help you with a repayment plan
  • Unsecured debt cannot exceed $394,7255 and secured debt cannot exceed $1,184,200
  • Allow the ability to reduce principal loan balances after meeting specific requirements
  • The advantage to clear out debt while keeping the assets including your home and car

When you file chapter 13 none of your assets will be sold. You can stop debt collectors and the foreclosure process. Additionally, you will not have as much of a severe impact on your credit score. A chapter 13 stays on your credit for 7 years, however many creditor see it as a repaid debt and therefore consider it more favorable than a chapter 7. Lastly, you will be able to retain the assets you are still paying for as long as your payments are on time.


What happens when I file for bankruptcy?

As it might be clear by now, the answer to this question really depends on what type of bankruptcy you are going to file.

Our attorneys will thoroughly explain the advantages and disadvantages of each of the options that chapter 7 and chapter 13 bankruptcy will provide to your own individual situation. We offer a free consultation with an experienced skilled bankruptcy attorney who will help you find the best way to get your life back and get back on your feet again.