Chapter 7 vs Chapter 13 -- Which Should I File?

Quick Decision Framework

The choice between Chapter 7 and Chapter 13 depends on your specific circumstances. Here is a quick framework:

Chapter 7 may be right if:

• Your income is below the state median (or you pass the means test)
• You have little or no non-exempt property
• Most of your debts are unsecured (credit cards, medical bills)
• You want a fast resolution (3-4 months)
• You do not need to catch up on mortgage or car payments

Chapter 13 may be right if:

• Your income is above the means test threshold
• You are behind on mortgage payments and want to save your home
• You have non-exempt property you want to keep
• You have debts that are dischargeable in Chapter 13 but not Chapter 7
• You have regular income and can make monthly plan payments

Side-by-Side Comparison

Factor	Chapter 7	Chapter 13
Duration	3-6 months	3-5 years
Income requirement	Must pass means test	Must have regular income
Property	Non-exempt may be sold	Keep all; pay value through plan
Mortgage arrears	Cannot cure	Can cure through plan
Car loans	Reaffirm, surrender, or redeem	Pay through plan (cramdown possible)
Tax debts	Some dischargeable	Priority taxes paid in full
Filing fee	$338	$313
Discharge scope	Standard	Broader ("superdischarge")
Repeat filing	8-year bar	2-year bar

The Means Test

The means test under Section 707(b) determines whether you qualify for Chapter 7. If your household income is below the state median for your family size, you pass automatically. If it is above, a more detailed calculation determines whether you have enough disposable income to fund a Chapter 13 plan.

When You Might Need Both (Chapter 20)

Some people benefit from filing Chapter 7 first to eliminate unsecured debt, then filing Chapter 13 later to address secured debts like mortgage arrears. This "Chapter 20" strategy is legal and widely used. See Chapter 7 to Chapter 13 for details on timing.