Chapter 7 vs Chapter 13

How do I decide Whether Chapter 7 or Chapter 13 Bankruptcy is best for me?

In a Chapter 7 Bankruptcy, you pay creditors out of non-exempt property owned at the time of filing.
In a Chapter 13 Bankruptcy, you keep all assets owned (even those that are not exempt under Chapter 7) at the time of filing and pay creditors out of future income over 3 to 5 years.


If you are like most people, all or most of your property will be exempt from creditors. If so, Chapter 7 Bankruptcy is generally a simpler, less expensive, and without losing any of your property.

However, Chapter 13 Bankruptcy may be your best option if, one or more of the following apply: 

1. You don't qualify for Chapter 7 Bankruptcy because you obtained Chapter 7 relief less than 8 years ago
2. You don't have the up-front money to pay for a Chapter 7 Bankruptcy (attorney's fees for Chapter 13 can be repaid within the Chapter 13 plan)
3. You need to get rid of certain debts you can't get rid of in Chapter 7 such as certain taxes, the amount claimed as damages for the willful destruction of another's property, debts which were not discharged or were waived in a prior bankruptcy, and marital property settlements as a result of divorce (does not include ongoing child support requirements)
4. You need to catch up on missed payments on property you would like to keep under a payment plan and avoid foreclosure or repossession
5. You want to keep property you own even though it wouldn't be covered by an exemption under Chapter 7
6. You have too much income after subtracting "reasonable and necessary" living expenses for your area and certain debt repayment.
7. You want to reduce your debt on certain secured loans to the value of the collateral. However, this is not available for home loans or vehicles purchased less than 2.5 years prior to bankruptcy filing.
8. You want the Court to reduce your interest rate on your secured debt obligations to a manageable amount

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