Chapter 7 vs Chapter 13 Bankruptcy: Which Is Better? [2026 Guide]

Side-by-Side Comparison

Feature	Chapter 7 Bankruptcy	Chapter 13 Bankruptcy
Duration	3-6 months	3-5 years
Debt Discharged	Most unsecured debt eliminated	Repay portion through plan
Assets	May lose non-exempt property	Keep all property
Income Requirement	Must pass means test (low income)	Regular income required
Cost	$1,500-$3,500 (attorney + fees)	$3,000-$6,000 (attorney + fees)
Credit Impact Duration	10 years on credit report	7 years on credit report
Best For	Low income / few assets	Higher income / want to keep property

Pros & Cons

Chapter 7 Bankruptcy

✓ Quick process (3-6 months)
✓ Most debts completely eliminated
✓ Fresh start with debt wiped clean
✓ Lower attorney costs
✓ No repayment plan required

✗ May lose non-exempt assets
✗ Stays on credit report for 10 years
✗ Must pass means test (income limits)
✗ Cannot file again for 8 years
✗ Does not stop foreclosure long-term

Chapter 13 Bankruptcy

✓ Keep all your property and assets
✓ Stop foreclosure and catch up on mortgage
✓ Only 7 years on credit report
✓ No income limits
✓ Can cram down certain secured debts
✓ Protects co-signers from collection

✗ 3-5 year repayment plan
✗ Higher total cost (attorney + payments)
✗ Must have regular income
✗ Less flexible budget during repayment
✗ Can be dismissed if payments missed

Comparison: Person with $50,000 in Debt

	Chapter 7 Bankruptcy	Chapter 13 Bankruptcy
Total Debt	$50,000	$50,000
Amount Repaid	$0 (discharged)	$20,000-$30,000 (3-5 yr plan)
Attorney + Filing Fees	~$2,000	~$4,500
Time to Completion	4 months	3-5 years
Home Kept?	Only if exempt	Yes
Credit Report Impact	10 years	7 years

Which Is Better for You? Take the Quiz

1. Is your income below the median for your state?

Yes No, above median

2. Do you own a home you want to keep?

No / Renting Yes

3. Do you want to eliminate debt as fast as possible?

Yes I can do a repayment plan

4. Are you behind on mortgage or car payments?

No Yes, need to catch up

The Bottom Line

Chapter 7 is best for lower-income individuals with few assets who want a fast, clean slate. Chapter 13 is better for people with regular income who want to keep their home and repay a portion of their debts over time. Both should be a last resort after exploring debt negotiation and consolidation.

Frequently Asked Questions

Will I lose my house in Chapter 7?

It depends on your state's homestead exemption. If your equity exceeds the exemption, the trustee can sell the home. Many states have generous exemptions that protect your home.

Can I choose between Chapter 7 and Chapter 13?

Not always. Chapter 7 requires passing a means test based on income. If your income is above your state's median, you may be required to file Chapter 13.

What debts cannot be discharged in bankruptcy?

Student loans (usually), child support, alimony, most tax debts, court fines, and debts from fraud or DUI cannot be discharged in either chapter.

Chapter 7 vs Chapter 13 Bankruptcy