Step 4Your planChapter 7 vs 13
Chapter 7 and Chapter 13, side by side
Both are federal court cases that start with an automatic stay. They work very differently — especially for a home that is behind on payments. This is a comparison, not a recommendation.
| Chapter 7"Liquidation" — usually a few months | Chapter 13A 3- to 5-year repayment plan | |
|---|---|---|
| What it is | A trustee may sell property that is not protected and pays creditors; most people with modest property keep what they have because of exemptions. | You propose a plan to pay some or all of your debts over 3 to 5 years, through a trustee, while keeping your property. |
| A home behind on payments | Does not provide a way to catch up missed mortgage payments. The lender keeps its lien and can foreclose after the case unless the loan is brought current another way. | Can spread missed mortgage payments over the plan while you keep making regular payments — the right to do so lasts until the home is sold at a lawful sale. |
| How long | About 3–6 months from filing to discharge. | 3 to 5 years of plan payments. |
| Income screen | The means test: income at or below the Texas median passes the first screen. | Needs regular income and debts under the legal limits; income sets the plan length. |
| What ends | Personal liability on many debts — credit cards, medical bills, personal loans. Not most taxes, child support or student loans. | What the plan provides for, after all plan payments are made. |
| Property | Protected by exemptions; the trustee looks at anything above them. | You keep property; the plan must pay creditors at least what they would get in Chapter 7. |
| Court fee | $338 | $313 |
How the two paths run over time
A note on Chapter 11, Subchapter V
A faster reorganization for small businesses and some self-employed people with business debts under a legal limit. It is complex and always needs a lawyer.
Which chapter fits — or whether bankruptcy fits at all — depends on your income, property, debts and goals. Only a lawyer can say. Bring these questions:
- Is bankruptcy the right route for me at all, compared with loss mitigation, reinstatement or a defense in court?
- What are the differences between Chapter 7 and Chapter 13 for someone in my situation — and what happens to my home and car in each?
- Which property could be at risk, and which protections would you use?
- Do I pass the means test once expenses are counted?
- What will this cost in total, and can the filing fee be paid in installments or waived?
- How will this affect my credit, and for how long?
- Will any forgiven debt create a tax bill (IRS Form 982)?
- If not bankruptcy, what else should I try first?
11 U.S.C. § 109(e)Chapter 13 is only for people with regular income whose debts are under limits set by law (adjusted every three years). A lawyer checks this.
Quoted text“Only an individual with regular income”Verified against the official source
11 U.S.C. § 1322(b)(5)A Chapter 13 plan can spread missed mortgage payments over time, as long as the regular payments are kept up during the case.
Quoted text“provide for the curing of any default within a reasonable time and maintenance of payments while the case is pending”Verified against the official source
11 U.S.C. § 1322(c)(1)The right to cure a home-loan default in Chapter 13 lasts until the home is sold at a lawful foreclosure sale. After the sale, it is generally too late.
Quoted text“until such residence is sold at a foreclosure sale that is conducted in accordance with applicable nonbankruptcy law”Verified against the official source
11 U.S.C. § 1322(b)(2)A Chapter 13 plan generally cannot change the terms of the main mortgage on the home you live in. (In the Fifth Circuit, a second lien with no equity behind it at all is treated differently — ask a lawyer.)
Quoted text“other than a claim secured only by a security interest in real property that is the debtor's principal residence”Verified against the official source
11 U.S.C. § 1322(d)Chapter 13 plans last three to five years; which one depends on income compared with the state median.
Quoted text“the plan may not provide for payments over a period that is longer than 3 years”Verified against the official source
11 U.S.C. § 727(a)In Chapter 7 the court grants a discharge (erasing personal liability for many debts) unless one of the listed exceptions applies.
Quoted text“The court shall grant the debtor a discharge, unless”Verified against the official source
11 U.S.C. § 727(a)(8)No Chapter 7 discharge if a Chapter 7 discharge was granted in a case filed within the prior 8 years.
Quoted text“in a case commenced within 8 years before the date of the filing of the petition”Verified against the official source
11 U.S.C. § 524(c)(4)A "reaffirmation" keeps you personally liable on a debt (often a car loan) after bankruptcy. It can be cancelled before discharge or within 60 days after it is filed, whichever is later.
Quoted text“within sixty days after such agreement is filed with the court, whichever occurs later”Verified against the official source
11 U.S.C. § 707(b)(1)For people with mostly consumer debts, Chapter 7 can be dismissed as "abuse" if income is high enough to repay. The "means test" is how that is measured.
Quoted text“whose debts are primarily consumer debts”Verified against the official source
28 U.S.C. § 1930(a)(1)(A)The Chapter 7 filing fee (plus court administrative fees). It can be paid in installments, and some people qualify for a waiver.
Quoted text“chapter 7 of title 11, $245”Verified against the official source
28 U.S.C. § 1930(a)(1)(B)The Chapter 13 filing fee (plus court administrative fees). It can be paid in installments.
Quoted text“chapter 13 of title 11, $235”Verified against the official source
28 U.S.C. § 1930(f)(1)The court may waive the Chapter 7 fee for a person with income under 150% of the poverty line who cannot pay in installments.
Quoted text“has income less than 150 percent of the income official poverty line”Verified against the official source