Chapter 7 vs. Chapter 13 Bankruptcy: Costs, Timelines, and Which Debts Actually Die

Bankruptcy has one branding problem and two very different products. Chapter 7 is a liquidation: qualifying unsecured debt is wiped in roughly four months from filing to discharge. Chapter 13 is a court-supervised repayment plan that runs three to five years before anything is discharged. Same courthouse, same word on your credit report — wildly different timelines, costs, and outcomes.

People who'd clearly benefit from one chapter regularly stumble into the other, or into neither, because the deciding factors — the means test, exemptions, what survives discharge — sound like law-school trivia. They're not. They're a handful of arithmetic questions about your income, your assets, and your debt mix.

Here's how each chapter actually works, what each one costs, which debts die and which don't, and the honest comparison against the settle-it-yourself path most people try first.

How each chapter actually works

Chapter 7 is the short one. You file, a trustee reviews your assets, anything not protected by exemptions can be sold to pay creditors — though the large majority of Chapter 7 cases are "no-asset" cases where exemptions cover everything and creditors get nothing. About four months after filing, qualifying debts are discharged: legally dead, uncollectible, gone. An automatic stay kicks in the day you file, immediately halting lawsuits, garnishments, and collection calls.

Chapter 13 is the long one. Instead of liquidating, you propose a plan to pay creditors out of your disposable income for three to five years (five is typical if your income is above your state's median). You keep your property — including property Chapter 7 might not protect — and at the end of the plan, remaining qualifying unsecured debt is discharged. The same automatic stay applies, with one superpower Chapter 7 lacks: Chapter 13 can stop a home foreclosure and let you catch up on missed mortgage payments over the life of the plan.

Roughly speaking: Chapter 7 is for people with little disposable income and mostly unsecured debt. Chapter 13 is for people with steady income who need time — usually to save a house or car, or because their income disqualifies them from Chapter 7.

The means test: which door you're allowed through

You don't simply pick a chapter. Chapter 7 requires passing the means test, which works in two stages:

1. Income vs. state median. If your household income over the prior six months, annualized, is below your state's median for your household size, you typically pass. Done.
2. Disposable income calculation. Above the median, you deduct allowed expenses; if what's left could meaningfully repay creditors over five years, you're steered into Chapter 13 instead.

Medians vary a lot by state and household size — this is exactly the kind of number to verify for your state rather than estimate. The practical takeaway: below-median filers almost always qualify for Chapter 7; above-median filers often land in Chapter 13 whether they prefer it or not. Chapter 13 has its own gate — your secured and unsecured debts must fall under statutory caps, which most consumers are nowhere near.

What each chapter costs — and what dies

Typical costs as of mid-2026: Chapter 7 attorney fees run roughly $1,000–2,500 plus a filing fee of about $340, generally paid up front. Chapter 13 attorney fees run roughly $3,000–4,500 — higher because the case runs for years — but most of it is usually folded into the monthly plan payment, which is why people with no cash on hand often can afford to file 13.

Which debts actually die is the same list in both chapters:

• Dischargeable: credit cards, medical bills, personal loans, most old utility and phone balances, deficiency balances after repossession.
• Not dischargeable: child support and alimony, most student loans (discharge exists but requires proving undue hardship in a separate proceeding — rare, though marginally less rare than it used to be), recent income taxes, court fines and restitution, debts from fraud.

Secured debts are their own category: the debt can die, but the lien survives — keep paying for the car and house or surrender them.

Here's a worked comparison for a household carrying $40,000 in unsecured debt (cards and medical), using typical mid-2026 figures:

| | Chapter 7 | Chapter 13 (36-month plan) | |---|---|---| | Unsecured debt going in | $40,000 | $40,000 | | Filing fee | ~$340 | ~$315 | | Attorney fee | ~$1,800 up front | ~$4,000, paid through the plan | | Plan payments | None | $250/mo × 36 = $9,000 | | Of which: trustee fee (~10%) | — | ~$900 | | Of which: attorney | — | ~$4,000 | | Of which: unsecured creditors | Typically $0 (no-asset case) | ~$4,100 (~10¢ on the dollar) | | Debt discharged | ~$40,000 | ~$35,900 | | Total cost to you | ~$2,140 | ~$9,315 | | Time to discharge | ~4 months | 3 years |

The $9,000 in plan payments splits into roughly $900 of trustee fees, $4,000 of attorney fees, and $4,100 to creditors — leaving about $35,900 of the original $40,000 discharged at the end. Chapter 7 is dramatically cheaper and faster when you qualify for it and have nothing exemptions won't cover. Chapter 13 earns its cost when it's protecting something — a home in foreclosure, a car, above-exemption assets — or when the means test leaves you no choice.

What you keep, and the credit-report clocks

Exemptions decide what you keep in Chapter 7: every state protects some amount of home equity, a vehicle, retirement accounts (401(k)s and most IRAs are broadly protected in either chapter), and household goods. Amounts vary enormously by state — some protect generous home equity, some very little, and some let you choose federal exemptions instead. In Chapter 13 you keep everything regardless, because you're paying creditors at least what they'd have gotten in a 7.

The credit clocks: a Chapter 7 stays on your credit report for 10 years from filing; a Chapter 13 for 7 years. That sounds catastrophic, but compare it to the alternative honestly. If you're already missing payments, your score is taking the damage anyway — each charge-off and collection is its own seven-year mark. Filers typically see scores begin recovering within a year or two of discharge, because the debt-to-income picture resets. Meanwhile, years of failed settlement attempts rack up the same derogatory marks without the discharge at the end. For deep insolvency, bankruptcy is often the faster road back — a comparison the debt management vs. settlement breakdown makes in detail.

When each chapter fits — and the one place not to DIY

Chapter 7 fits when: you pass the means test, your assets fit within exemptions, your debt is mostly dischargeable unsecured debt, and you're not trying to catch up a mortgage.

Chapter 13 fits when: you're above-median income, you're behind on a house or car you intend to keep, you have assets a 7 would put at risk, or you have nondischargeable debt (taxes, support arrears) that a structured plan lets you pay down under court protection.

Neither fits when: your debt is mostly student loans, you could realistically pay everything off within about five years, or you recently ran up cards knowing you'd file — courts notice.

Now the strong recommendation: talk to a bankruptcy attorney before deciding anything, and use a free consultation to do it. Most consumer bankruptcy attorneys offer them. Nearly everything above — means test math, your state's exemptions, timing around a recent bonus or an expected tax refund, whether to file before or after a lawsuit — turns on state-specific details where a mistake is expensive and sometimes unfixable. Filing pro se is legal, and Chapter 7 pro se filers sometimes manage; Chapter 13 pro se cases fail at very high rates. This site's whole ethos is that you can run most debt math yourself — this is the exception. A free hour with someone who files these weekly is worth more than forty hours of forums.

The verdict and your next steps

Chapter 7 and Chapter 13 aren't a good option and a bad option — they're a fast, cheap reset for people with little to protect, and a slower, costlier shield for people with income and assets worth protecting. If your unsecured debt can't plausibly be cleared in five years of honest budgeting, a four-month discharge for roughly $2,000 all-in deserves a clear-eyed comparison against years of settlement calls and lawsuits.

This week:

1. Pull your six-month income total and compare it to your state's median household income — that's your first means-test signal.
2. List your debts in two columns: dischargeable and not. If the "not" column dominates, bankruptcy may solve less than you think.
3. Book free consultations with two local bankruptcy attorneys and bring both lists.
4. If you're not at bankruptcy-level insolvency, map the middle path instead: debt-relief options compared.

This article is for general education and is not legal advice. Costs, fees, exemptions, and medians are typical ranges as of mid-2026 and vary widely by state and case; bankruptcy law turns on individual facts — consult a licensed bankruptcy attorney in your state before filing.