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How are Chapter 7 and Chapter 13 bankruptcy different?

On Behalf of | Jul 8, 2020 | Chapter 13

When you are deep in debt, the options for declaring bankruptcy may seem overwhelming or confusing.

Deciding whether to file for either Chapter 7 or Chapter 13 can affect the length of time you need for repayment and what assets you can keep.

Qualifications and property

According to FindLaw, not everyone can file for Chapter 7. Unlike Chapter 13 bankruptcy, your eligibility for Chapter 7 relies on your income level. If your income is greater than the median income of your state, then you cannot continue the process.


Chapter 7 is commonly known as liquidation bankruptcy since you sell your belongings and assets in order to repay part a required part of your debts. In comparison, you follow a reorganization plan with Chapter 13. You must earn a steady income in order to qualify for this type of plan to prove that you can handle regular payments.

You do not need to pay discharged debts in a Chapter 7 bankruptcy case. These debts are not the total sum of what you owe, however, since you also have priority debts and liens. In Chapter 13 cases, you can repay these debts with a long-term repayment plan. Both types require a trustee in order to oversee the process.


The most common length of time for those in debt to have to follow Chapter 7 plans is typically around three months. This agreement ends when a discharge officially clears. In contrast, Chapter 13 plans can last as long as three to five years. If a restructuring plan is or is not the right choice for you, then Chapter 13 may work better.