# Difference Between Chapter 7 and 13

Author: Nex Virox Team (Editorial Team)  
Reviewed by: Varshal Nirbhavane  
Published: 2026-08-26  
Last updated: 2026-08-26  
Canonical: https://nexvirox.com/difference-between/difference-between-chapter-7-and-13/

**Quick answer:** The main difference between Chapter 7 and 13 is that Chapter 7 wipes out eligible debts through asset liquidation, while Chapter 13 uses a 3–5 year repayment plan. Chapter 7 is a liquidation bankruptcy for those with limited income, while 13 is a reorganization bankruptcy for those with steady income.

<h2>Difference Between Chapter 7 and 13: Comparison Table</h2>
<table>
<thead>
<tr><th>Aspect</th><th>Chapter 7</th><th>13</th></tr>
</thead>
<tbody>
<tr><td><strong>Definition</strong></td><td>Liquidation bankruptcy that discharges most unsecured debts.</td><td>Repayment bankruptcy that reorganizes debts into a 3-5 year plan.</td></tr>
<tr><td><strong>Purpose</strong></td><td>Wipes out qualifying debts by selling non-exempt assets.</td><td>Keeps assets while paying creditors from future disposable income.</td></tr>
<tr><td><strong>Core Mechanism</strong></td><td>Court-appointed trustee liquidates assets and distributes proceeds.</td><td>Debtor keeps property and makes fixed monthly plan payments.</td></tr>
<tr><td><strong>Eligibility Test</strong></td><td>Requires passing the means test based on state median income.</td><td>No means test; requires regular income to fund the plan.</td></tr>
<tr><td><strong>Income Limit</strong></td><td>Household income must fall below the state median.</td><td>Income must exceed monthly living expenses by a set amount.</td></tr>
<tr><td><strong>Debt Limit</strong></td><td>No statutory cap on unsecured debt amounts.</td><td>Secured debt under $1,395,875; unsecured under $465,275.</td></tr>
<tr><td><strong>Asset Retention</strong></td><td>Non-exempt assets like second homes may be sold.</td><td>Keeps all assets including homes and vehicles.</td></tr>
<tr><td><strong>Exemptions</strong></td><td>State or federal exemptions protect limited property value.</td><td>Uses same exemptions but protects assets via plan payments.</td></tr>
<tr><td><strong>Payment Duration</strong></td><td>No payment plan; discharge occurs within months.</td><td>Plan lasts 36 months for median income; 60 months above.</td></tr>
<tr><td><strong>Discharge Timing</strong></td><td>Discharge typically granted 3-6 months after filing.</td><td>Discharge only after completing all plan payments.</td></tr>
<tr><td><strong>Monthly Payments</strong></td><td>No monthly payments to creditors after filing.</td><td>Fixed monthly payment to trustee for 3-5 years.</td></tr>
<tr><td><strong>Cost to File</strong></td><td>Filing fee around $338 plus attorney fees.</td><td>Filing fee around $313 plus higher attorney fees.</td></tr>
<tr><td><strong>Attorney Fees</strong></td><td>Typically $1,200-$2,500 for straightforward cases.</td><td>Typically $3,000-$6,000 due to plan complexity.</td></tr>
<tr><td><strong>Credit Impact</strong></td><td>Stays on credit report 10 years from filing date.</td><td>Stays on credit report 7 years from filing date.</td></tr>
<tr><td><strong>Home Protection</strong></td><td>Mortgage arrears must be paid or home surrendered.</td><td>Mortgage arrears paid through plan over 3-5 years.</td></tr>
<tr><td><strong>Car Loan Handling</strong></td><td>Must reaffirm or surrender vehicle within 45 days.</td><td>Pays arrears and future payments through the plan.</td></tr>
<tr><td><strong>Student Loans</strong></td><td>Discharged only with separate undue hardship lawsuit.</td><td>Same hardship standard; no advantage over Chapter 7.</td></tr>
<tr><td><strong>Tax Debts</strong></td><td>Income taxes dischargeable if older than 3 years.</td><td>Priority tax debts must be paid in full.</td></tr>
<tr><td><strong>Secured Debt</strong></td><td>Lien remains; surrender property or reaffirm debt.</td><td>Cramdown reduces balance to current vehicle value.</td></tr>
<tr><td><strong>Co-signers</strong></td><td>Co-signers remain fully liable for discharged debts.</td><td>Co-signer protection applies to consumer debts.</td></tr>
<tr><td><strong>Trustee Role</strong></td><td>Trustee liquidates assets and reviews for fraud.</td><td>Trustee collects payments and disburses to creditors.</td></tr>
<tr><td><strong>Court Appearance</strong></td><td>Single 341 meeting of creditors typically required.</td><td>341 meeting plus possible confirmation hearings.</td></tr>
<tr><td><strong>Non-dischargeable Debts</strong></td><td>Child support, alimony, and most fines survive.</td><td>Same debts survive; priority claims paid first.</td></tr>
<tr><td><strong>Filing Frequency</strong></td><td>Cannot file again for 8 years after prior discharge.</td><td>Cannot file again for 2 years after prior discharge.</td></tr>
<tr><td><strong>Income Stability</strong></td><td>No ongoing income requirement after filing.</td><td>Requires stable income for entire plan duration.</td></tr>
<tr><td><strong>Business Debts</strong></td><td>Discharges sole proprietorship debts quickly.</td><td>Business debts included in personal repayment plan.</td></tr>
<tr><td><strong>Typical User</strong></td><td>Low-income filers with few assets and high unsecured debt.</td><td>Higher-income filers with valuable assets to protect.</td></tr>
<tr><td><strong>Primary Limitation</strong></td><td>Asset loss and 10-year credit report mark.</td><td>5-year payment commitment and higher legal costs.</td></tr>
<tr><td><strong>Success Rate</strong></td><td>Most cases complete since no ongoing payments required.</td><td>About one-third of plans fail before completion.</td></tr>
<tr><td><strong>Best-Fit Scenario</strong></td><td>Fits those below median income with no home equity.</td><td>Fits those with steady income and mortgage arrears.</td></tr>
</tbody>
</table>

<h2>What Is Chapter 7?</h2>
<p>Chapter 7 is a United States bankruptcy provision that liquidates nonexempt assets to repay creditors. It eliminates most unsecured debts like credit cards and medical bills. Chapter 7 exists to give individuals a financial fresh start when they cannot realistically repay what they owe.</p>
<h3>Definition of Chapter 7</h3>
<p>Chapter 7, titled "Liquidation," is a bankruptcy proceeding under Title 11 of the United States Code where a court-appointed trustee sells a debtor's nonexempt property and distributes the proceeds to creditors. Upon completion, the court grants a discharge that permanently releases the debtor from qualifying dischargeable debts.</p>
<h3>Key Characteristics of Chapter 7</h3>
<table>
<thead>
<tr><th>Characteristic</th><th>What It Means in Practice</th></tr>
</thead>
<tbody>
<tr><td>Liquidation process</td><td>A trustee sells nonexempt assets like second homes or luxury items to pay creditors.</td></tr>
<tr><td>Means test</td><td>Your income must fall below your state's median to qualify for Chapter 7.</td></tr>
<tr><td>Discharge of debts</td><td>Most unsecured debts like credit cards and medical bills are permanently erased.</td></tr>
<tr><td>Fast timeline</td><td>The entire process typically finishes in three to six months, unlike longer repayment plans.</td></tr>
<tr><td>Automatic stay</td><td>Filing immediately halts foreclosures, repossessions, wage garnishments and collection calls.</td></tr>
<tr><td>No repayment plan</td><td>You do not make monthly payments to creditors under a Chapter 7 plan.</td></tr>
<tr><td>Asset exemption limits</td><td>State or federal laws protect certain property like a primary car or basic household goods.</td></tr>
<tr><td>Credit impact</td><td>A Chapter 7 discharge remains on your credit report for ten full years.</td></tr>
<tr><td>Trustee oversight</td><td>A neutral trustee reviews your paperwork and conducts a creditors' meeting.</td></tr>
<tr><td>Non-dischargeable debts</td><td>Student loans, most taxes, child support and alimony survive the bankruptcy.</td></tr>
</tbody>
</table>
<h3>Common Examples of Chapter 7</h3>
<ul>
<li><strong>General Motors</strong> – the automaker used Chapter 7 in 2009 to liquidate assets and sell them to a new entity.</li>
<li><strong>Circuit City</strong> – the electronics retailer filed Chapter 7 in 2008 and closed all 567 U.S. stores.</li>
<li><strong>Blockbuster</strong> – the video rental chain liquidated in 2010 after failing to compete with streaming services.</li>
<li><strong>Toys "R" Us</strong> – the toy retailer filed Chapter 7 in 2018 and shut down all American locations.</li>
<li><strong>Payless ShoeSource</strong> – the footwear chain liquidated in 2019, closing roughly 2,500 stores.</li>
<li><strong>Borders Group</strong> – the bookstore chain filed Chapter 7 in 2011 and sold off remaining inventory.</li>
<li><strong>RadioShack</strong> – the electronics retailer used Chapter 7 in 2015 to close most of its stores.</li>
<li><strong>An individual with medical debt</strong> – a patient with $150,000 in hospital bills and no income qualifies for discharge.</li>
<li><strong>A laid-off worker</strong> – someone with $40,000 in credit card debt and no job can erase the balance.</li>
<li><strong>A small business owner</strong> – a sole proprietor with personal guarantees on business loans can liquidate.</li>
</ul>
<h3>Advantages and Limitations of Chapter 7</h3>
<table>
<thead>
<tr><th>Advantages</th><th>Limitations</th></tr>
</thead>
<tbody>
<tr><td>Erases most unsecured debts quickly, giving you a clean financial slate within months.</td><td>You permanently lose nonexempt property like vacation homes, valuable collections or expensive vehicles.</td></tr>
<tr><td>Stops wage garnishment immediately, so your paycheck stays intact while the case proceeds.</td><td>A Chapter 7 discharge stays on your credit report for ten years, making loans costly.</td></tr>
<tr><td>Requires no monthly repayment plan, freeing up cash flow for essential living expenses.</td><td>You cannot file again for eight years from the prior filing date, leaving no quick safety net.</td></tr>
<tr><td>Protects essential assets through exemptions, such as your primary residence and basic car.</td><td>Secured debts like car loans or mortgages are not reduced; you must pay or surrender the property.</td></tr>
<tr><td>Provides relief from collection lawsuits and stops creditor harassment through the automatic stay.</td><td>Student loans, recent taxes, child support and alimony remain fully payable after discharge.</td></tr>
<tr><td>Typically costs less than a Chapter 13 plan because attorney fees are lower and the case is shorter.</td><td>Renting an apartment or getting a job can become harder because landlords and employers check credit.</td></tr>
<tr><td>Does not require a multi-year commitment, so you can rebuild credit sooner than with repayment plans.</td><td>You must pass the means test, so high earners are forced into Chapter 13 instead.</td></tr>
<tr><td>Discharges co-signed debts for you, though your co-signer remains fully liable for the balance.</td><td>Recent luxury purchases or cash advances within 90 days may be challenged as fraudulent.</td></tr>
<tr><td>Stops foreclosure temporarily, giving you a short window to negotiate a mortgage modification.</td><td>The public record of your bankruptcy is accessible to anyone, creating lasting reputational effects.</td></tr>
<tr><td>Offers a psychological fresh start by removing the burden of unpayable consumer debt.</td><td>You must complete a credit counseling course before filing and a debtor education course after.</td></tr>
</tbody>
</table>

<h2>What Is 13?</h2>
<p>13 is a Chapter 13 bankruptcy, a legal debt-relief process for individuals with regular income. It lets you keep your property while repaying debts through a court-approved monthly repayment plan over three to five years.</p>
<h3>Definition of 13</h3>
<p>Chapter 13 bankruptcy is a federal court-supervised reorganization plan where a debtor with disposable income proposes a structured repayment schedule to creditors. The court confirms the plan, and a trustee distributes the monthly payments until the agreed debts are satisfied.</p>
<h3>Key Characteristics of 13</h3>
<table>
<thead>
<tr><th>Characteristic</th><th>What It Means in Practice</th></tr>
</thead>
<tbody>
<tr><td>Income requirement</td><td>You must have a steady, regular income sufficient to fund the repayment plan.</td></tr>
<tr><td>Debt limits</td><td>Unsecured debts must stay under $2,750,000 and secured debts under the same cap.</td></tr>
<tr><td>Plan duration</td><td>Plans run three years, or five years if your income exceeds your state's median.</td></tr>
<tr><td>Trustee oversight</td><td>A court-appointed trustee collects your monthly payments and distributes them to creditors.</td></tr>
<tr><td>Property retention</td><td>You keep your home and car, provided you stay current on the plan payments.</td></tr>
<tr><td>Automatic stay</td><td>Filing halts foreclosures, repossessions, garnishments and collection calls immediately.</td></tr>
<tr><td>Disposable income</td><td>All disposable income after necessary expenses must go toward the repayment plan.</td></tr>
<tr><td>Secured debt arrearage</td><td>Past-due mortgage or car payments are paid through the plan over its duration.</td></tr>
<tr><td>Discharge scope</td><td>Remaining unsecured debts are discharged only after you complete every plan payment.</td></tr>
<tr><td>No liquidation</td><td>Your assets are not sold; you repay debts from your ongoing earnings instead.</td></tr>
</tbody>
</table>
<h3>Common Examples of 13</h3>
<ul>
<li><strong>Mortgage arrearage catch-up</strong> – A homeowner behind on payments uses a plan to repay the missed amount over five years.</li>
<li><strong>Car loan modification</strong> – A debtor reduces the interest rate on a car loan and repays the balance within the plan.</li>
<li><strong>Tax debt resolution</strong> – A taxpayer with substantial IRS or state tax arrears repays them through a structured plan.</li>
<li><strong>Student loan co-signer protection</strong> – A borrower keeps a co-signer safe from collection while repaying non-dischargeable student loans.</li>
<li><strong>Small business owner</strong> – A sole proprietor continues operating a business while repaying creditors through a plan.</li>
<li><strong>Medical debt consolidation</strong> – A person with overwhelming hospital bills consolidates them into one affordable monthly payment.</li>
<li><strong>Foreclosure prevention</strong> – A homeowner facing imminent foreclosure stops the sale and cures the default.</li>
<li><strong>Vehicle repossession reversal</strong> – A debtor reclaims a repossessed car by paying its value through the plan.</li>
<li><strong>Domestic support obligations</strong> – A parent repays past-due child support or alimony in full through the court plan.</li>
<li><strong>Payday loan payoff</strong> – A borrower with high-interest payday loans repays them without the predatory interest compounding.</li>
</ul>
<h3>Advantages and Limitations of 13</h3>
<table>
<thead>
<tr><th>Advantages</th><th>Limitations</th></tr>
</thead>
<tbody>
<tr><td>You keep your home and car instead of losing them to liquidation.</td><td>You must commit three to five years of your income to the plan.</td></tr>
<tr><td>You can catch up on missed mortgage payments over a long period.</td><td>Your disposable income is tightly controlled by the trustee and court.</td></tr>
<tr><td>You can reduce the interest rate on certain secured debts like car loans.</td><td>Debt limits cap eligibility, so high-debt filers cannot use this option.</td></tr>
<tr><td>Co-signers on debts are often protected from creditor collection actions.</td><td>You cannot take on new credit without trustee approval during the plan.</td></tr>
<tr><td>Non-dischargeable debts like taxes can be paid through the plan.</td><td>Certain debts, such as student loans, survive the discharge entirely.</td></tr>
<tr><td>The automatic stay stops foreclosures and repossessions immediately.</td><td>You must stay current on all post-filing debts like mortgages and taxes.</td></tr>
<tr><td>You can strip off junior liens on property in some cases.</td><td>Your credit score remains severely damaged for up to seven years.</td></tr>
<tr><td>You avoid the public sale of your assets that Chapter 7 requires.</td><td>Filing costs and attorney fees are higher than a simple Chapter 7 case.</td></tr>
<tr><td>Your repayment plan can be tailored to your actual budget.</td><td>If you miss a payment, the court can dismiss your case and lift protections.</td></tr>
<tr><td>You gain a structured path to become debt-free without liquidation.</td><td>You must complete the entire plan to receive a discharge of remaining debts.</td></tr>
</tbody>
</table>

<h2>Similarities Between Chapter 7 and 13</h2>
<table>
<thead>
<tr><th>Shared Aspect</th><th>How Chapter 7 and 13 Are Alike</th></tr>
</thead>
<tbody>
<tr><td><strong>Legal Basis</strong></td><td>Chapter 7 and 13 both derive from the United States Bankruptcy Code for consumer debt relief.</td></tr>
<tr><td><strong>Federal Court</strong></td><td>Chapter 7 and 13 both require filing in the federal bankruptcy court system.</td></tr>
<tr><td><strong>Automatic Stay</strong></td><td>Chapter 7 and 13 both immediately halt creditor collection calls, lawsuits, and wage garnishments.</td></tr>
<tr><td><strong>Credit Counseling</strong></td><td>Chapter 7 and 13 both mandate completion of an approved credit counseling course before filing.</td></tr>
<tr><td><strong>Debtor Education</strong></td><td>Chapter 7 and 13 both require a financial management course after filing to receive a discharge.</td></tr>
<tr><td><strong>Filing Fee</strong></td><td>Chapter 7 and 13 both charge a standard court filing fee set by the federal judiciary.</td></tr>
<tr><td><strong>Means Test</strong></td><td>Chapter 7 and 13 both apply the means test to evaluate your income for eligibility.</td></tr>
<tr><td><strong>Discharge Goal</strong></td><td>Chapter 7 and 13 both aim to discharge qualifying unsecured debts like credit cards and medical bills.</td></tr>
<tr><td><strong>Credit Impact</strong></td><td>Chapter 7 and 13 both place a public bankruptcy record on your credit report for ten years.</td></tr>
<tr><td><strong>Trustee Role</strong></td><td>Chapter 7 and 13 both assign a court-appointed trustee to oversee your individual case.</td></tr>
<tr><td><strong>Creditor Meeting</strong></td><td>Chapter 7 and 13 both require attending a meeting of creditors under oath.</td></tr>
<tr><td><strong>Asset Disclosure</strong></td><td>Chapter 7 and 13 both demand full disclosure of assets, income, and debts on official schedules.</td></tr>
<tr><td><strong>Fraud Bar</strong></td><td>Chapter 7 and 13 both deny discharge for debts incurred through fraud or false statements.</td></tr>
<tr><td><strong>Student Loans</strong></td><td>Chapter 7 and 13 both rarely discharge student loans unless you prove undue hardship.</td></tr>
<tr><td><strong>Tax Debts</strong></td><td>Chapter 7 and 13 both treat recent income taxes as nondischargeable priority obligations.</td></tr>
<tr><td><strong>Child Support</strong></td><td>Chapter 7 and 13 both exclude domestic support obligations from discharge entirely.</td></tr>
<tr><td><strong>Secured Debt</strong></td><td>Chapter 7 and 13 both require paying secured creditors to keep collateral like cars or homes.</td></tr>
<tr><td><strong>Co-Signer Risk</strong></td><td>Chapter 7 and 13 both leave co-signers liable for debts you discharge or restructure.</td></tr>
<tr><td><strong>Attorney Advice</strong></td><td>Chapter 7 and 13 both strongly recommend hiring a bankruptcy attorney for proper filing.</td></tr>
<tr><td><strong>Court Forms</strong></td><td>Chapter 7 and 13 both use the same official national bankruptcy forms for petitions and schedules.</td></tr>
<tr><td><strong>Electronic Filing</strong></td><td>Chapter 7 and 13 both use the PACER system for submitting and tracking case documents.</td></tr>
<tr><td><strong>Filing Limits</strong></td><td>Chapter 7 and 13 both restrict repeat filings for a set number of years after discharge.</td></tr>
<tr><td><strong>Public Record</strong></td><td>Chapter 7 and 13 both make your case file publicly accessible through the court system.</td></tr>
<tr><td><strong>Employment Effects</strong></td><td>Chapter 7 and 13 both protect you from employer discrimination based solely on bankruptcy filing.</td></tr>
<tr><td><strong>Utility Protection</strong></td><td>Chapter 7 and 13 both prevent utility companies from disconnecting service for prepetition bills.</td></tr>
<tr><td><strong>Eviction Limits</strong></td><td>Chapter 7 and 13 both temporarily delay eviction proceedings under the automatic stay.</td></tr>
<tr><td><strong>Liquidation Value</strong></td><td>Chapter 7 and 13 both calculate nonexempt asset value to determine creditor payments.</td></tr>
<tr><td><strong>Confirmation Hearing</strong></td><td>Chapter 7 and 13 both involve court hearings to approve the case plan or discharge.</td></tr>
<tr><td><strong>Record Permanence</strong></td><td>Chapter 7 and 13 both leave a permanent court case file that remains publicly searchable.</td></tr>
<tr><td><strong>Fresh Start</strong></td><td>Chapter 7 and 13 both provide a legal pathway to eliminate overwhelming debt and rebuild finances.</td></tr>
</tbody>
</table>

<h2>Chapter 7 or 13: Which Should You Choose?</h2>
<p>The single deciding variable is your <strong>disposable income</strong>. If your monthly income minus necessary living expenses leaves little or nothing to pay creditors, Chapter 7 is the faster, cheaper path. If you have steady income that can cover a 3-to-5-year repayment plan, Chapter 13 protects assets like a home from foreclosure.</p>
<h3>When to Use Chapter 7</h3>
<p>Choose Chapter 7 when your <strong>disposable income falls below your state's median</strong> and you have <strong>few valuable assets</strong> to protect. It suits people with overwhelming medical bills, job loss, or credit card debt who need a fresh start in 3-6 months. You must pass the means test to qualify.</p>
<h3>When to Use 13</h3>
<p>Choose 13 when your <strong>income exceeds the state median</strong> or you own <strong>a home or car you want to keep</strong>. It also fits people behind on mortgage payments who need time to catch up. You repay a portion of debts over 3-5 years, stopping foreclosure and repossession immediately.</p>

<h2>Common Misconceptions About Chapter 7 and 13</h2>
<table>
<thead>
<tr><th>Common Myth</th><th>The Reality</th></tr>
</thead>
<tbody>
<tr><td><strong>Chapter 7 wipes out all debts completely.</strong></td><td>Chapter 7 does not discharge student loans, recent taxes, child support, or alimony obligations.</td></tr>
<tr><td><strong>Chapter 13 is only for people with steady jobs.</strong></td><td>Chapter 13 requires regular income, but self-employed filers qualify with documented consistent earnings.</td></tr>
<tr><td><strong>You lose your house automatically in Chapter 7.</strong></td><td>Chapter 7 lets you keep exempt home equity, often up to $25,150 or more in many states.</td></tr>
<tr><td><strong>Chapter 13 means paying back 100% of what you owe.</strong></td><td>Chapter 13 usually pays creditors only a percentage, often 10% to 50%, of unsecured debts.</td></tr>
<tr><td><strong>Chapter 7 is faster and always the better choice.</strong></td><td>Chapter 13 is better when you have non-exempt assets or income too high for Chapter 7.</td></tr>
<tr><td><strong>Filing Chapter 7 stops foreclosure immediately and permanently.</strong></td><td>Chapter 7 only delays foreclosure temporarily; Chapter 13 can cure arrears and keep your home.</td></tr>
<tr><td><strong>Chapter 13 lets you keep all assets no matter their value.</strong></td><td>Chapter 13 requires you to pay creditors at least the value of your non-exempt assets through the plan.</td></tr>
<tr><td><strong>You cannot file Chapter 7 if you filed Chapter 13 before.</strong></td><td>Chapter 7 is available 6 years after a prior Chapter 7 discharge, but Chapter 13 discharge timing differs.</td></tr>
<tr><td><strong>Chapter 7 ruins your credit for a full decade.</strong></td><td>Chapter 7 stays 10 years, but rebuilding credit with secured cards often yields 650-plus scores within 2 years.</td></tr>
<tr><td><strong>Chapter 13 is a debt consolidation loan from the government.</strong></td><td>Chapter 13 is a court-approved repayment plan, not a loan, with no interest on most unsecured debts.</td></tr>
<tr><td><strong>All your property gets sold in a Chapter 7 liquidation.</strong></td><td>Chapter 7 trustees only sell non-exempt assets, which most filers protect fully using state or federal exemptions.</td></tr>
<tr><td><strong>Chapter 13 requires you to pay every single debt in full.</strong></td><td>Chapter 13 discharges remaining unsecured balances after completing all plan payments, typically 3 to 5 years.</td></tr>
<tr><td><strong>Spouses must file bankruptcy together under either chapter.</strong></td><td>One spouse may file Chapter 7 or Chapter 13 alone, but joint debts then become the non-filing spouse's responsibility.</td></tr>
<tr><td><strong>Chapter 7 eliminates tax debts without any conditions.</strong></td><td>Chapter 7 discharges income taxes only if they are 3-plus years old and you filed a timely return.</td></tr>
<tr><td><strong>Chapter 13 payments last exactly 36 months for everyone.</strong></td><td>Chapter 13 plans run 3 years, but extend to 5 years if your income exceeds your state's median income.</td></tr>
<tr><td><strong>You cannot keep a car in Chapter 7 bankruptcy.</strong></td><td>Chapter 7 lets you keep a car if its equity is exempt or you reaffirm the loan and continue payments.</td></tr>
<tr><td><strong>Chapter 13 stops wage garnishment instantly and forever.</strong></td><td>Chapter 13 stops garnishment upon filing, but the trustee may collect payments directly from your paycheck.</td></tr>
<tr><td><strong>You must be completely broke to qualify for Chapter 7.</strong></td><td>Chapter 7 eligibility uses the means test comparing your income to your state's median, not total poverty.</td></tr>
<tr><td><strong>Chapter 13 is a public record that employers always discover.</strong></td><td>Chapter 13 is public, but employers rarely check bankruptcy records, and federal law prohibits most hiring discrimination.</td></tr>
<tr><td><strong>Chapter 7 discharge eliminates secured debts like car loans.</strong></td><td>Chapter 7 discharge removes personal liability, but the lender still repossesses the car unless you reaffirm.</td></tr>
<tr><td><strong>Chapter 13 cannot include past-due mortgage payments.</strong></td><td>Chapter 13 specifically allows catching up on mortgage arrears over 3 to 5 years while keeping current payments.</td></tr>
<tr><td><strong>Filing Chapter 7 requires appearing before a judge in court.</strong></td><td>Chapter 7 filers attend a brief meeting of creditors with the trustee, not a formal judge hearing.</td></tr>
<tr><td><strong>Chapter 13 filers cannot use credit cards during the plan.</strong></td><td>Chapter 13 filers may use credit cards with trustee approval, but new debt must be disclosed to the court.</td></tr>
<tr><td><strong>Chapter 7 is cheaper than Chapter 13 in total costs.</strong></td><td>Chapter 7 costs $338 in fees plus attorney, but Chapter 13 fees are $313 with trustee payments over years.</td></tr>
<tr><td><strong>You lose your retirement accounts in Chapter 7 bankruptcy.</strong></td><td>Chapter 7 protects 401(k)s, IRAs, and pensions under federal exemption laws up to $1,512,350 per person.</td></tr>
<tr><td><strong>Chapter 13 requires approval from all your creditors to start.</strong></td><td>Chapter 13 starts automatically upon filing, and creditors object only if your plan fails legal requirements.</td></tr>
<tr><td><strong>Chapter 7 discharge happens automatically right after filing.</strong></td><td>Chapter 7 discharge occurs roughly 60 to 90 days after the creditors meeting, not immediately upon filing.</td></tr>
<tr><td><strong>Chapter 13 is only for people with mortgage debt.</strong></td><td>Chapter 13 also helps with car loans, tax debts, student loan arrears, and catching up on missed payments.</td></tr>
<tr><td><strong>You can file Chapter 13 as many times as you want.</strong></td><td>Chapter 13 filers get a discharge only 2 years after a prior Chapter 13 discharge, with limits on repeat filings.</td></tr>
<tr><td><strong>Chapter 7 and Chapter 13 both require liquidating your assets.</strong></td><td>Chapter 7 liquidates non-exempt assets; Chapter 13 never sells property and uses future income for repayment.</td></tr>
</tbody>
</table>

<h2>Conclusion</h2><p>Difference Between Chapter 7 and 13 comes down to liquidation versus repayment. Chapter 7 wipes unsecured debts fast, but you must pass the means test and lose non-exempt assets. Chapter 13 keeps property through a 3-5 year payment plan. Choose Chapter 7 if you lack income; choose Chapter 13 if you have steady wages.</p>

## FAQ

### What is the main difference between Chapter 7 and Chapter 13 bankruptcy?
Chapter 7 liquidates nonexempt assets to pay creditors and discharges most unsecured debts in about three to six months, while Chapter 13 creates a three-to-five-year repayment plan that keeps your property.

### Which is better, Chapter 7 or Chapter 13?
The better option depends on your income and assets, because Chapter 7 suits low-income filers who pass the means test, whereas Chapter 13 fits higher earners who need to catch up on secured debts.

### How much does Chapter 7 cost compared to Chapter 13?
Chapter 7 costs roughly $338 in court filing fees plus attorney fees of $1,000 to $2,500, while Chapter 13 costs about $313 in filing fees and attorney fees of $3,000 to $7,500.

### Does Chapter 7 require you to sell your house?
Chapter 7 can require selling your house if its equity exceeds your state's homestead exemption, but Chapter 13 protects your home by letting you repay missed mortgage payments through a plan.

### Can I keep my car in Chapter 13 bankruptcy?
Yes, you can keep your car in Chapter 13 if you continue making plan payments that cover the vehicle's loan arrears and ongoing monthly payments over the repayment period.

### What is the biggest mistake people make when choosing between Chapter 7 and Chapter 13?
The biggest mistake is filing Chapter 7 without checking the means test, because your case may be dismissed or converted to Chapter 13 if your income exceeds your state's median.

### Are Chapter 7 and Chapter 13 interchangeable for all debts?
No, they are not interchangeable because Chapter 7 discharges unsecured debts like credit cards and medical bills, but Chapter 13 is required for debts like recent tax obligations and non-dischargeable support payments.

### Can I switch from Chapter 13 to Chapter 7 after filing?
Yes, you can switch from Chapter 13 to Chapter 7 by filing a motion to convert, but you must still pass the means test and have no pending property issues that liquidation would expose.

### Does Chapter 13 stop wage garnishment immediately?
Yes, Chapter 13 stops wage garnishment immediately upon filing because the automatic stay goes into effect, and your plan then pays priority debts like child support through the trustee.

### Which chapter is safer for protecting my retirement accounts?
Chapter 7 is generally safer for retirement accounts because federal exemptions fully protect most 401(k)s and IRAs, while Chapter 13 requires you to commit disposable income to creditors for years.