Which chapter should I file ? is almost always the first question someone considering filing bankruptcy.
This chart highlights the differences between the two chapters most individuals select.
|Chapter 13||Chapter 7|
|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.|
|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 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|