ABA Family Legal Guide

Consumer Bankruptcy

Chapter 7 or Chapter 13?

Advantages to Each

Are there advantages to filing under Chapter 7?

Yes, several.

1. There are many debtors for whom the advantages of Chapter 13 do not matter: debtors with no nonexempt assets they particularly wish to keep, no debts excepted from discharge under Chapter 13, no prior discharge within the last eight years, and no cosigners on their consumer debt loans.
2. You get to keep your post-petition earnings free and clear from discharged pre-bankruptcy debts.
3. Some debtors are not eligible for Chapter 13 bankruptcy, either because their income is not sufficiently regular to fund payments under a plan, or because the amount of their debt exceeds the limits.
4. The discharge is normally within 90 days of filing, whereas in a Chapter 13 the discharge will be after all plan payments are made which is normally three to five years after the filing.