The Brown Law Firm — Jerome A. Brown, Board Certified Attorney in Consumer Bankruptcy Law and Business Bankruptcy Law by the Texas Board of Legal Specialization — 40+ Years Legal Experience
Personal Bankruptcy
Chapter 7 vs. Chapter 13
Chapter 7 discharges most unsecured debt in three to six months with no repayment plan. Chapter 13 is a three-to-five-year court-supervised repayment plan for individuals with regular income. They serve different purposes and are not simply faster and slower versions of the same thing: Chapter 13 provides tools Chapter 7 does not, but those tools only matter if your goal actually requires them.
Many Clients assume they need Chapter 13 because they heard their income is too high for Chapter 7, or that they have too many assets to qualify. Often those assumptions don’t hold up under review. Jerome’s approach is to understand what you’re trying to accomplish first. If Chapter 7 gets you there, that is what he will recommend, because it is cheaper, quicker, and less complicated than a Chapter 13 case.
Side by side
How it works
Chapter 7
Discharges most unsecured debt, such as credit cards, medical bills, and personal loans, in one court process. No repayment plan.
Chapter 13
A court-supervised repayment plan lasting three to five years. Remaining eligible debts are discharged once the plan is complete.
Timeline
Chapter 7
Most cases run three to six months from filing to discharge.
Chapter 13
Three to five years, the length of the repayment plan.
Qualifying
Chapter 7
Depends on passing a means test based on income and expenses. Individuals with primarily non-consumer (business) debts are exempt from the means test.
Chapter 13
Available to individuals with regular income, including those whose income is too high to pass the Chapter 7 means test.
Catching up on a house or vehicle
Chapter 7
Does not include a repayment mechanism for missed mortgage or vehicle payments; you must be current or otherwise resolve the arrears.
Chapter 13
Lets you catch up on missed mortgage or vehicle payments through the plan while keeping the property.
Non-exempt assets
Chapter 7
Property that isn't exempt under Texas or federal law can be at risk, though the vast majority of filers keep everything they own.
Chapter 13
You can often keep non-exempt property by paying its value to creditors over the life of the plan instead of surrendering it.
When Chapter 13 does something Chapter 7 cannot
Chapter 13 is most useful when you are severely delinquent on a mortgage or vehicle payment and want to keep the property, when you have non-dischargeable debt like certain tax obligations or domestic support arrears that you need to pay over time, when you own non-exempt property you want to protect by paying its value over time instead of surrendering it, or when your income exceeds what would let you qualify for Chapter 7.
Outside of those situations, Chapter 7 often accomplishes what people assume only Chapter 13 can, at a fraction of the time and cost.
Related reading
- Chapter 7 Bankruptcy
Full detail on the faster, no-repayment-plan path.
- Chapter 13 Bankruptcy
Full detail on the repayment-plan path, including catching up on a mortgage or vehicle.
- Foreclosure & Collection Defense
Chapter 13's most common real-world use case.
- Guide: What You Keep
How Texas exemptions apply under either chapter.
Not sure which one fits?
Jerome A. Brown is Board Certified in both Consumer Bankruptcy Law and Business Bankruptcy Law by the Texas Board of Legal Specialization, with more than 40 years of experience. He will review your situation personally — income, debts, assets, and goals — and give you a straight answer about which path actually fits.
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