What are the differences between Chapter 7 and Chapter 13?
Chapter 7 vs Chapter 13
Here is a side-by-side comparison of some of the differences between Chapter 7 and Chapter 13.
| Chapter 7 Liquidation | Chapter 13 Reorganization | |
|---|---|---|
| Who may file? | Individuals and Businesses (Sole Proprietorship, Corporations, Partnerships) | Individuals and Sole Proprietorships |
| What are the debt limitations? | No maximum debt limits. | Secured debts must be less than $1,081,400 and unsecured debts must be less than $360,475. |
| What happens to my debts? | Eliminates debtor’s obligation to pay qualified debts upon discharge. | Eliminates debts after the 3 to 5 year repayment plan ends. |
| Which debts are not typically discharged? | Alimony and child support, debts owed to an ex-spouse from divorce or separation, student loans, recent back taxes or taxes you haven’t filed, drunk driving injury claims, most criminal fines, money borrowed by fraud or false pretenses, and debts you don’t list. | Priority debts must be paid in full before any other debts in the repayment plan. These include alimony and child support, taxes less than 3 years old or taxes the IRS has secured in a lien against your house, drunk driving injury claims, most criminal fines, employees wages and benefits contributions, deposits received for services not yet rendered, any money owed to the government besides taxes, and debts you don’t list. |
| What are the income limitations? | Income from the past 6 months must be less than the state median for a like-sized family or you will need to pass the Means Test to qualify for a Chapter 7. | Must have enough disposable income to feasibly make the repayment plan payments. |
| What assets will I lose? | Loss of all non-exempt property if using the means test. However, available exemptions usually protect most or all of your assets. | You can keep any property if the debt is included in the repayment plan. You may decide not to keep property, like an extra car, by allowing it to be repossesed. That debt would not be included in the repayment plan since the property is no longer in your posession. |
| Will filing stop foreclosure on my home? | Will only delay foreclosure due to the automatic stay. | Foreclosure is suspended during bankruptcy proceedings with an automatic stay. The mortgage must be included in the repayment plan and missed payments caught up if you want to keep the house. |
| What will happen if I have cosigners? | Cosigners or co-debtors are still obligated to pay the debts. | Co-debtors are left alone as long as you make your repayment plan payments. |
| How long do I have to wait if I received a discharge in the past? | You can file a Chapter 7 again after 8 years from the date you filed a previous Chapter 7 and 6 years after a previous Chapter 13. | You can file at anytime, however, you won’t receive the discharge until 2 years pass from a preceeding Chapter 13 discharge and 4 years pass from a preceeding Chapter 7 discharge. |
| How much are the court fees to file my bankruptcy? | $299 | $274 |
| How long will it take to receive a discharge? | Approximately 90 days after you file. | Minimum 3 to 5 years (depending upon the amount of your debt) after the creditor meeting. |
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