Chapter 7 vs Chapter 13: What’s the Difference?

If you need to file for bankruptcy, it could feel like the end of the world. You may be stressed about what will happen next, how to file correctly, and which option for filing you should choose.

Two of the most common options to file for bankruptcy are chapter 7 and chapter 13.

If you have no experience with bankruptcy, these may be completely unknown filing options for you. So, what is the difference between chapter 7 and chapter 13? How do you figure out which is the best filing option for your situation?

Chapter 7 Bankruptcy

Chapter 7 is perhaps the simplest way of moving forward with filing for bankruptcy. This option is also known as straight or liquidation bankruptcy because of its overall straightforward process. You will need to have a certain income to qualify for this option.

With chapter 7, the court will place a temporary hold that prevents creditors from taking your money, your property, or your home (in a process called foreclosure). Your case is turned over to a bankruptcy trustee who will notate what assets you have and learn more about your finances.

The trustee may decide that some of your property is non-exempt and may be used to pay back your creditor.

Exemptions vary from state to state. However, the majority of chapter 7 claims are “no-asset cases,” meaning that property is not taken from you.

The process can take four to six months, and after that, your debts will be discharged. This means you will not owe money on them.

Having a qualified, skilled bankruptcy lawyer will be key to accurately completing chapter 7 paperwork and filing correctly. 

Chapter 13 Bankruptcy

Learning the difference between Chapter 7 and Chapter 13The key difference with filing for Chapter 13 bankruptcy is that it can allow you to keep all of your property and possessions, exempt or non-exempt.

Instead of having your debts cleared as in chapter 7, you will instead get on a plan to pay off your debts to your creditors.

Compared to Chapter 7, where your debts are essentially wiped out, a chapter 13 filing helps you significantly pay down your debts but does not necessarily get rid of them completely.

Debt limits change each year, but you will need to owe below a specific amount to qualify for this option. You will also need to have a regular source of income.

With chapter 13, a court is similarly involved and a hold will be placed on your debts to prevent creditors from collecting any more of your money.

The court will appoint your case to a trustee. He/she will then collect your debts over the course of three to five years through a repayment plan. With this plan, your trustee works with you to find a way to pay off debts that do not exceed your income.

The trustee will directly reimburse your creditors as they receive the funds from you. 

Once you officially complete the plan after the set amount of years, the remainder of your debt will be discharged.

One unique thing about Chapter 13 is that you can discharge more types of debts than with a Chapter 7 filing. Additionally, you can file for Chapter 13 multiple times if necessary. Overall with Chapter 13, there are fewer limitations on when you can file for this type of bankruptcy. 

Choose the Right Attorney

While considering which option you will choose to file, keep in mind that some debts (such as alimony, child support, and student loans) generally are not allowed to be forgiven or written off, even after you have filed for bankruptcy.

It is important to speak with an experienced bankruptcy lawyer in order to help you choose the best filing option for your situation and help you through the entire process.

Blue Bee Bankruptcy Law has more than 60 years of combined bankruptcy experience. We help people in various situations choose the best filing option for them. We help you accurately file your claim, reduce your debts, and rebuild your credit. Learn more about us at  


Best Bankruptcy Attorneys in Salt Lake City

If you’re dealing with the potential of bankruptcy, give us a call. Our team will work to help you by reviewing all of the options our firm has available. We will ensure you’ll get the best possible outcome for your situation.

Get in touch today so we can start working on either halting bankruptcies or preventing them from taking place altogether!

Contact Us Today For Help! You can schedule your free consultation online or call us at (801) 285-098.


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