Chapter 7 focuses on eligible debt and nonexempt property
Chapter 7 is commonly described as liquidation. A trustee reviews the filer’s property and financial records, and nonexempt property may be available for administration. Many individual cases are no-asset cases, but that result depends on the facts and the exemptions that apply.
Eligibility can involve income testing, prior filings, and other requirements. A discharge may eliminate personal liability for many debts, but not every obligation is dischargeable.
Chapter 13 uses a court-approved repayment plan
Chapter 13 is designed for individuals with regular income. The debtor proposes a plan, generally lasting three to five years, and makes payments through a trustee. It can be useful when a person needs time to address arrears or wants to keep property that could be at risk in another chapter.
The plan must satisfy statutory requirements, and the debtor generally receives a discharge only after completing the required payments.
The right comparison is personal
Income, household size, property, secured debt, tax obligations, recent transfers, and the reason for filing can all affect the analysis. A consultation should begin with a complete financial picture rather than a chapter selected in advance.
Helpful resources
These links provide background information. Requirements and procedures can change, and general materials cannot account for the facts of a particular matter.