When you’re overwhelmed by debt, bankruptcy can offer a path to financial relief—but which type should you file? Most individuals file under Chapter 7 or Chapter 13, and while both offer powerful protections, they serve different needs. Understanding the differences can help you make the right choice for your situation.
Often called “liquidation bankruptcy,” Chapter 7 allows you to wipe out most unsecured debts (like credit cards and medical bills) quickly—usually within a few months. It’s designed for people with limited income and few assets.
Known as “reorganization bankruptcy,” Chapter 13 lets you keep your property while catching up on missed payments through a structured repayment plan that lasts 3 to 5 years.
|
Factor |
Chapter 7 |
Chapter 13 |
|
Income Level |
Low or no income |
Regular income |
|
Asset Protection |
May lose non-exempt property |
Keep all property with court approval |
|
Debt Type |
Unsecured debt |
Secured & unsecured |
|
Time to Complete |
3–6 months |
3–5 years |
|
Foreclosure Status |
Won’t stop foreclosure long-term |
Can stop foreclosure with repayment |
Choosing between Chapter 7 and Chapter 13 depends on your goals, income, and financial situation. At Amerihope Alliance Legal Services, we offer compassionate, knowledgeable guidance to help you make the best decision—and take control of your financial future.