4 Key Differences Between Filing For Chapter 7 & Chapter 13

When you’re no longer able to repay your debts your first thought would be to skip town. I would advise against that, not unless you want Dog the bounty hunter chasing after you. There are many legitimate ways to tackle your debts that don’t involve running. One of which is filing for bankruptcy. There are two types of bankruptcy, Chapter 7 and Chapter 13. If you’re going to file for bankruptcy you might as well be able to tell the difference between the two. That’s where we come in. We’ll help you understand the difference between a Chapter 7 filing and a Chapter 13 filing.

Modus Operandi

The major difference between the two is that one discharges your debts while the other gives you adequate time to make payments. A successful Chapter 7 filing will free you from most of your debts, excluding taxes, child support and student loans. A successful Chapter 13 filing will give you about 3 to 5 years to pay off your debts according to a payment plan decided by the court. In both cases once the filing process is complete the creditors can no longer harass the individual. However, under a Chapter 13 filing the individual still has to repay the debt.


As we’ve seen already, filing for bankruptcy under Chapter 7 is far more alluring than filing under Chapter13. However, it’s that much more difficult. To be eligible for a Chapter 7 claim you need to pass a means test. If your income is over the state median income, then you’ll have to file under Chapter 13. Even under a Chapter 13 filing your unsecured debts should be under $307,675 and your secured debts should not be over $922,975. There are a lot more eligibility criteria differentiating the two, but this is the main distinction for eligibility between Chapter 7 and Chapter13.

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Under a Chapter 7 filing all non exempt assets must be surrendered to the creditors. However, under a Chapter 13 filing the individual can keep non exempt assets as long as the payment plan is followed through. The person’s house and car are protected under Chapter 7, but only if they are under a certain value. In Chapter 13 as long as the payment plan is followed the person’s house and car remain untouched regardless of their value. A bankruptcy attorney can further advice you on asset distribution when filing for bankruptcy.


In a Chapter 7 filing the court discharges the debts and the case is concluded. However, in a Chapter 13 filing the debts are discharged only after the payment plan is completed. Once the plan is completed under the given time the court discharges the debts and the case is concluded. So in essence it takes 3 to 5 years more to conclude a Chapter 13 case than it does to conclude a Chapter 7 case.

Filing for bankruptcy seems difficult largely due to ignorance. We hope differentiating between Chapter 7 and Chapter 13 filing has shed some light on the process. If it hasn’t you can always try skipping town.

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