Filing under the wrong bankruptcy chapter can cost you assets, time, or the discharge you need. Chapter 7 wipes most unsecured debt fast but requires passing the means test and may risk non-exempt assets. Chapter 13 lets you keep property and catch up on secured debt but ties you to a 3 to 5-year repayment plan. This screener identifies which chapter fits your situation.
Filing under the wrong chapter or at the wrong time can cost you assets or delay your discharge. A bankruptcy attorney reviews your full financial picture at no cost.
Chapter 7 bankruptcy is a liquidation process. A trustee reviews your assets, sells any that exceed your state's exemption limits, and distributes proceeds to creditors. In return, most remaining unsecured debt is discharged, typically within 3 to 6 months. It's faster and cheaper than Chapter 13 but requires passing the means test, which compares your income to your state's median and, if you're above it, evaluates your disposable income. Our means test calculator can help you estimate whether you'd pass before speaking with an attorney.
Chapter 13 is a reorganization. You keep your assets but commit to a court-approved 3 to 5-year repayment plan based on your disposable income. It's the right choice when you have significant non-exempt assets you want to protect, secured debt arrears to cure, or when your income disqualifies you from Chapter 7. It's also the only way to strip a second mortgage in certain circumstances or save a home from foreclosure mid-process.
The means test is a 2-part calculation. If your average monthly income over the past 6 months, annualized, falls below your state's median income for your household size, you automatically pass and qualify for Chapter 7. If you're above the median, a second calculation subtracts allowed expenses from your income to determine whether you have enough disposable income to repay creditors, which could push you into Chapter 13 or trigger a presumption of abuse. Income thresholds vary significantly by state and household size, so state-specific figures from the US Trustee Program's current data apply.
Every state sets its own exemption limits, determining how much equity in a home, car, retirement accounts, and personal property you can protect in Chapter 7. Assets above those limits can be liquidated by the trustee. Chapter 13 avoids this risk entirely since you keep all assets in exchange for repaying at least their non-exempt value over the plan period. If you have significant home equity, a vehicle worth more than your exemption, or other non-exempt property, Chapter 13 is often the safer path.
Both chapters discharge most unsecured debt: credit cards, medical bills, personal loans, and old utility balances. Neither chapter discharges student loans in most cases, recent taxes, domestic support obligations, or debts incurred through fraud. Chapter 13 can sometimes discharge debts that Chapter 7 can't, like certain non-dischargeable tax debts older than 3 years and some property settlement obligations from divorce, making it worth comparing both options carefully with an attorney.