Skip to Content
Call Us Today! 559-900-1263

Chapter 7 vs. Chapter 13 - What Kind of Bankruptcy is Right for You?


For individuals in dire financial straits, filing for bankruptcy can be an opportunity to get a fresh start. However, the process of filing for bankruptcy is complex, and making the right decisions if you want to file is crucial.

One of the first things you'll need to decide is what kind of bankruptcy to file for. In most cases, individuals file for either Chapter 7 or Chapter 13 bankruptcy. Understanding the differences between the two can help you find the best path forward in your case.

Our lawyers have the tools to help you navigate your bankruptcy case. To schedule a consultation with our team, contact us online or via phone at (559) 900-1263.

The Role of Bankruptcy Trustees in Bankruptcy Cases

Before covering the types of bankruptcy, it's important to understand what bankruptcy trustees do.

The Department of Justice's US Trustee Program selects trustees in bankruptcy cases. Bankruptcy trustees are professionals who know concerning bankruptcy laws, best practices, and how assets are commonly divided during bankruptcy cases.

During bankruptcy, the trustee acts as a liaison between the individual filing for bankruptcy and their creditors. Essentially, the trustee works with both parties to ensure the debtors receive the maximum amount of compensation for their debts, and the individual filing for bankruptcy receives an equitable outcome considering the circumstances of the case.

What Is a Chapter 7 Bankruptcy?

To file for a Chapter 7 bankruptcy, you must take a means test. The means test uses your income to establish whether you're eligible to file for bankruptcy. For one person to file for bankruptcy, they must make $4,018.25 per month ($48,219 per year). A two-person household must bring in $5,076.08 per month or less.

In a Chapter 7 bankruptcy, the bankruptcy court can repossess an individual's non-exempt assets to repay their debts (at least, as much as they are able).

The court cannot repossess all of an individual's assets to repay their debts. Certain vital assets, such as a person's place of living, vehicle, or other assets the court deems essential, are exempt from the bankruptcy process.

During the bankruptcy process, creditors can no longer attempt to contact the debtor (the individual filing for bankruptcy) with regard to delinquent payments.

Chapter 7 bankruptcy is generally suitable for individuals who fall under a certain monthly income and need a new financial start after being overwhelmed by debts or other financial difficulties.

What Is a Chapter 13 Bankruptcy?

Individuals who make too much money to pass a Chapter 7 bankruptcy means test often file for Chapter 13 bankruptcy instead.

During a Chapter 13 bankruptcy, creditors cannot repossess the debtor's assets or property to replace their debts. Instead, the trustee works with the debtor and the creditors to establish a repayment plan for their debts.

During both Chapter 7 and Chapter 13 bankruptcy, creditors can choose to abandon their debts instead of requiring a debtor to repay them.

It's important to note that while debtors can receive extensions on debt repayments using bankruptcy, certain types of debts aren't affected by bankruptcy. For example, if a debtor has child support payments, they must continue to make those throughout the bankruptcy case (or attempt to repay any outstanding child support delinquency).

At Arnold Law Group, PC, our bankruptcy lawyers will help you pursue the type of bankruptcy best for your case and seek an optimal outcome in your bankruptcy dispute.

To schedule a bankruptcy consultation with our team, contact us online or via phone at (559) 900-1263.

Share To: