Which chapter should I file ? is almost always the first question someone considering filing bankruptcy.
The answer is almost always: it depends. It depends on the make-up of your debt, your income and assets; the exemptions available in your state; and your goals.
This chart highlights the structural differences between the two chapters most individuals select.
| Chapter 13 | Chapter 7 | |
| Eligibility | Amount of debt capped | Must pass (or be excused from) the means test |
| Fees | Partial payment upfront possible- generally more expensive than 7 over life of plan | Wide range depending on issues and location |
| Timing | Less cash upfront required to file because fees can be paid through plan. | No case can be filed until all fees are paid in most districts |
| Credit reporting | 7 years from the date of filing. | 10 years from the date of filing. |
| Risk | Trustee generally supportive of your bankruptcy choice. | More scrutiny. UST charged with finding “abusers”. |
| Assets | You keep all your assets | You keep all exempt assets; trustee may liquidate non-exempt assets. |
| Duration | Plan runs 36-60 months | Discharge within 4-5 months |
| Control | You have right to dismiss the case; conversion to Chapter 7 is an option | Dismissal unavailable; trustee directs case. Conversion possible |
| Discharge | Broader discharge in 13 | More debts survive 7 |
| Secured debts | Payable over life of plan; cure of mortgage arrears | Prepetition terms of debt control |
| Costs | Filing fee $313; financial management class provided at no cost by trustee | Filing fee $338; financial management class paid for by debtor |
| 401(k) loans | Repayment permitted & deductible on means test | Repayment excluded from allowable expenses for means test |
