Chapter 7 vs Chapter 13 Bankruptcy Compared

The core difference is simple: Chapter 7 erases qualifying debt in a few months, while Chapter 13 restructures your debt into a repayment plan that runs three to five years. Chapter 7 is faster and cheaper but puts non-exempt property at risk and requires passing an income test. Chapter 13 lets you keep everything and catch up on missed mortgage or car payments, at the cost of years of plan payments.

Chapter 7 vs Chapter 13 at a Glance

Both chapters stop collection with the automatic stay the moment you file, and both end in a discharge that releases you from personal liability for most remaining debt. What differs is the mechanism. Chapter 7 is liquidation; Chapter 13 is reorganization. The table below lays out how they compare on the points that decide most cases.

Each of those rows gets a closer look below, so you can weigh the trade-offs against your own situation. For the standalone breakdowns, see how Chapter 7 bankruptcy works and what filing for Chapter 13 bankruptcy involves.

Eligibility: Income and Debt Limits

The two chapters screen filers in opposite ways. Chapter 7 has an income ceiling; Chapter 13 has a debt ceiling and an income floor.

To file Chapter 7, you have to pass the means test under 11 U.S.C. § 707(b). If your household income is below the median for your state and household size, you pass automatically. If it's above the median, a second calculation weighs your income against allowed living expenses to see whether you could realistically repay creditors. Filers who don't pass are steered toward Chapter 13.

Chapter 13 works the other way. There is no income cap, but you need regular income to fund a plan, and your debts have to fall under the statutory limits: secured debts under $1,580,125 and unsecured debts under $526,700 for cases filed on or after April 1, 2025. People whose debts exceed those thresholds generally use Chapter 11 instead. Because state median income figures change and depend on household size, the safest first step is to run your own numbers.

What Happens to Your Property

This is where the two chapters differ most, and it comes down to one question: what do you actually lose in Chapter 7?

In Chapter 7, a trustee can sell any property that isn't protected by an exemption and use the proceeds to pay creditors. Exemptions shield equity up to fixed dollar limits under 11 U.S.C. § 522 and the state lists that apply to you. In practice, most consumer Chapter 7 cases are "no-asset" cases: everything the filer owns is exempt, nothing is sold, and the debt is wiped out anyway. But if you have significant non-exempt equity, a valuable second vehicle, or other unprotected assets, Chapter 7 can force a sale.

Chapter 13 removes that risk entirely. You keep all your property, exempt or not, because you're repaying creditors through a plan rather than liquidating. That's the reason many homeowners with equity, or anyone behind on a mortgage or car loan, choose Chapter 13 even when they could pass the means test. Exemption rules differ by state, and some states let you choose the federal list while others require their own. See bankruptcy exemptions and your state's page for the limits that apply where you live.

Cost and Timeline Compared

Chapter 7 is both faster and cheaper on paper. The court filing fee is $338 for Chapter 7 and $313 for Chapter 13 under the current national fee schedule. A typical Chapter 7 case runs about three to four months from filing to discharge. A Chapter 13 case runs three to five years, because the discharge only comes after you complete the plan.

The filing-fee gap is small. The real cost difference is time and total payments: Chapter 13 asks you to commit years of disposable income to the plan under 11 U.S.C. § 1325, while Chapter 7 asks for none. Attorney fees are separate from the court fee and vary by location and complexity, and both chapters allow fee waivers or installment payments for filers who qualify. For a fuller breakdown, see what bankruptcy costs.

Why Chapter 13 May Be Better

Given that Chapter 7 is faster, cheaper, and wipes debt out completely, why would anyone choose Chapter 13? Because Chapter 7 can't do certain things Chapter 13 does well.

Chapter 13 lets you cure a default over time. If you've fallen behind on your mortgage and want to keep the house, the plan can spread the arrears across its full term while you stay current going forward, something Chapter 7 offers no mechanism for (11 U.S.C. § 1322). It protects property with equity you couldn't otherwise exempt, since nothing is liquidated. It can also help when you simply don't qualify for Chapter 7 because your income is too high. And the co-debtor stay under Chapter 13 shields people who co-signed your consumer debts from collection in a way Chapter 7 does not. For filers whose main goal is keeping a home or a car rather than erasing debt as fast as possible, Chapter 13 is often the stronger fit.

Downsides of Each Chapter

Neither chapter is free of trade-offs.

The downsides of Chapter 13 are mostly about duration and commitment. You live under a court-approved budget for three to five years, and if your income drops or an emergency hits, keeping up with plan payments can be hard. A meaningful share of Chapter 13 plans are never completed, and a case that fails partway through may leave debts undischarged. The discharge under 11 U.S.C. § 1328 comes only at the end, so the relief is delayed.

The downsides of Chapter 7 are about eligibility and property. You have to pass the means test, and the trustee can sell non-exempt assets. Chapter 7 also can't restructure secured debt: if you're behind on your mortgage, filing stops foreclosure only temporarily, and you get no built-in way to catch up. Both chapters leave certain debts intact. Neither discharges most student loans, recent income taxes, or domestic support obligations like child support and alimony. The discharge page covers exactly which debts survive.

Which Chapter Is Right for You

Start with eligibility, then weigh your goal. If you pass the means test, have mostly unsecured debt, and your property is fully exempt, Chapter 7 gives you the fastest clean break. If you're behind on a home or car you want to keep, have non-exempt equity to protect, or earn too much to pass the means test, Chapter 13 is likely the better path even though it takes years.

The national numbers reflect that split. In the 12 months ending December 2025, there were 374,294 Chapter 7 filings and 235,923 Chapter 13 filings, out of 621,164 total bankruptcy cases. Chapter 7 is the more common choice, but Chapter 13 remains the right tool for a large group of filers, particularly homeowners.