Two chapters solve different problems
| Question | Chapter 7 | Chapter 13 |
|---|---|---|
| How does the case work? | A case administrator called a trustee can sell estate property—the property brought into the case—that is not protected by an exemption. A no-distribution case means no money is distributed to unsecured creditors, not necessarily that the debtor owns nothing. | An eligible individual with regular income proposes a court-supervised repayment plan. |
| What payment structure? | No Chapter 13-style multiyear repayment plan; filing and professional costs still matter. | Usually three to five years, subject to the law and court approval of the plan. |
| What matters for property? | Exemptions (legal property protections), liens (creditor claims against property), asset values, transfers and equity after secured loans. | Exemptions and liquidation value still matter, together with plan payment requirements and secured claims. |
| What can remain? | Debts excluded from discharge—the court order releasing personal liability—and surviving rights against collateral may remain. | Certain debts and liens may remain; completion and the type of discharge matter. |
The judiciary explains each chapter’s basic process: Chapter 7, Chapter 13. Qualification, property protection and discharge are separate determinations. A short online income comparison cannot decide all of them.
Bring a complete case picture, including awkward facts
Debts and proceedings
List every creditor, disputed balance, co-borrower, guarantee, lawsuit, judgment, garnishment and collateral. Include taxes, support and education obligations for separate analysis.
Income and property
Bring income history, current budget, tax returns, bank records, retirement accounts, insurance cash value, real estate and vehicles with realistic values and loan balances.
History
Disclose prior bankruptcies, recent large purchases or cash advances, transfers, repayments to relatives and expected inheritances or claims. Do not omit assets because you believe they are protected.
Exemption law determines which property can be protected and may depend on residence history. “I live here now” does not always identify the applicable exemption system. Ask counsel before selling or transferring property in preparation for filing.
A collection stay and a discharge are different events
Filing generally triggers an automatic stay that pauses many collection activities, but exceptions, relief from stay and repeat-filing rules can change its scope. The discharge comes later and generally addresses personal liability for covered debts. It does not automatically remove every lien. Chapter 7 process and discharge
Student debt, support, certain taxes and fraud-related obligations need debt-specific review; neither “all debts disappear” nor “that category can never change” is a reliable universal rule. A co-signer or guarantor also needs separate analysis.
Ask what happens if the chosen path fails
For Chapter 13, examine a payment that works after housing, food, transportation and ongoing obligations. Initial plan payments can be due before confirmation; ask counsel when your first payment must be made and what happens if it is missed.
Ask about dismissal, conversion, noncompleted plans, property exposure and attorney charges if circumstances change. Also ask about required approved counseling before filing and debtor education afterward. Use current court and counsel information for fees, forms and deadlines. Bankruptcy can affect credit reporting for years, but no score recovery or approval outcome can be promised.
Sources and further reading
General educational information. The original evidence, dates and recorded qualifications are available in the optional archive below.