Chapter 7 vs. Chapter 13 Comparison Chart

    Comparing Chapter 13 and Chapter 7 Bankruptcy

    What happens if…Chapter 13Chapter 7
    You’re behind on your mortgage or car loan.You can repay the arrears through your plan, over three to five years, and keep the house or car, so long as you keep current on the existing monthly payments. If it’s feasible to pay off the entire loan before the end of your plan, you may be able reduce the amount you have to pay.You’ll probably have to either give the house or car back to the creditor or arrange to pay its wholesale value in full during your bankruptcy case
    You owe back taxes to the IRS.The result depends on your circumstances. See Eliminating Tax Debts in Bankruptcy.The result depends on your circumstances. See Eliminating Tax Debts in Bankruptcy.
    You have valuable nonexempt property.You keep all of your property.You must give it up, pay the trustee its fair market value or, if the trustee agrees, swap exempt property of equal value for it.
    You have codebtors on personal loans.The creditor may not seek payment from your codebtor for the duration of your case.The creditor will go after your codebtor for payment.
    You received a bankruptcy discharge within the previous six years.No problem; you can file anytime.You can’t file for Chapter 7 unless the recent bankruptcy was a Chapter 13 case, and you repaid at least 70% of your debts.
    You want to keep secured property by paying the creditor its value.You pay its replacement value (with interest) over time through your plan.You pay the wholesale value in a lump sum.
    Your disposable income is sufficient to fund a Chapter 13 plan.N/AThe bankruptcy court might throw out your case or pressure you to convert it to Chapter 13.
    You owe debts for:

    • back or prospective child support or alimony
    • student loans, unless repayment would cause you severe hardship
    • court-ordered restitution or criminal fines
    • taxes less than three years past due, or
    • debts for personal injuries arising from your intoxicated driving.
    These debts must be paid in full in your Chapter 13 repayment plan or you will owe a balance at the end of your bankruptcy.These debts cannot be erased in Chapter 7 bankruptcy.
    You owe nonsupport debts under a property settlement, agreement, or divorce decree.If you do not pay them in full during your Chapter 13 bankruptcy, the balance is wiped out at the end under Chapter 13 bankruptcy’s “superdischarge.”If your ex-spouse or another creditor objects, these debts are not discharged unless you prove to the court that:

    • you will be unable to pay these debts after your bankruptcy case, or
    • the benefit you will get by discharging the debts will outweigh any detriment to your ex-spouse.
    You have debts due to:

    • larceny (theft), breach of trust, or embezzlement
    • fraud, or
    • willful and malicious injury to another or another’s property.
    If you do not pay them in full during your Chapter 13 case, the balance is wiped out at the end under the superdischarge.These debts are not dischargeable if the creditor objects and proves your bad act to the court.