Understanding the differences between Chapter 7 and Chapter 13 bankruptcy is critical to choosing the right path forward. Our attorneys help you evaluate your options based on your income, assets, and financial goals.
Free Financial ConsultationMost bankruptcies filed are either Chapter 7 or Chapter 13 cases. The choice between them depends on your income, assets, debts, and financial goals. Understanding the key differences is essential to making the right decision for your situation.
Which Chapter Is Right for You?
Our attorneys evaluate your complete financial picture and recommend the option that provides the greatest benefit for your unique circumstances. Contact us for a consultation to determine the best path forward.
Chapter 7 is a "liquidation bankruptcy" designed to eliminate general unsecured debts like credit cards and medical bills. Eligibility requires little or no disposable income; those earning too much may be required to file Chapter 13 instead.
A trustee administers the case by reviewing your bankruptcy papers and documents and selling any nonexempt property to repay creditors. Most filers have no nonexempt assets, so creditors typically receive nothing and the filer keeps all of their property.
Chapter 13 is a "reorganization bankruptcy" for debtors with regular income who are able to repay at least a portion of their debts through a repayment plan. High earners who do not qualify for Chapter 7 may be required to file Chapter 13.
Key advantages of Chapter 13 include keeping all of your property and catching up on missed mortgage payments or stripping wholly unsecured junior liens. Debtors retain their nonexempt assets but must repay debts through a plan based on income, expenses, and debt type.
| Aspect | Chapter 7 | Chapter 13 |
|---|---|---|
| Type | Liquidation | Reorganization |
| Who Can File | Individuals and business entities | Individuals only |
| Eligibility | Low disposable income; must pass means test | Max $383,175 unsecured / $1,149,525 secured debt |
| Discharge Timeline | 3-5 months | Upon completing plan payments (3-5 years) |
| Property Treatment | Trustee sells nonexempt property | Debtors keep all property |
| Lien Stripping | No | Yes (if requirements met) |
| Loan Cramdown | No | Yes (if requirements met) |
| Benefits | Quick debt discharge; fresh start | Retain property; catch up on payments |
| Drawbacks | Loss of nonexempt assets; no missed payment relief | 3-5 year payment obligation; possible partial repayment |
Schedule a consultation with our bankruptcy attorneys to determine which chapter is right for your situation. We serve clients throughout Southwest Washington State including Clark County, Cowlitz County, and Skamania County.
Don’t face legal challenges alone. Our experienced attorneys are ready to fight for you.