Chapter 7 vs. Chapter 13 Bankruptcy Overview
Chapter 7 and
Chapter 13 are the two most common forms of bankruptcy. As you struggle financially
and seek a solution to resolve your debt troubles, my firm can discuss
the differences with you to help you make educated decisions for your
circumstances. At the Law Office of Keith Will Wynne, Esq., I can help
you pursue the best option by explaining to you the advantages and disadvantages
of each option.
Chapter 7 vs. Chapter 13 Bankruptcy
To break it down as simply as possible, a Chapter 7 Bankruptcy is ideal
if your income is below the median income for a household family of your
size, and you do not have any assets over your allowed exemptions.
Click here for a deeper discussion of income and assets.

Pros and Cons of Chapter 7 and Chapter 13
Chapter 7 Pro’s
- In most cases, your case is done 4 months from filing.
- In most cases, you do not have to pay unsecured creditors back-you walk
away with a fresh start.
Chapter 7 Con’s
- If you own property that you cannot exempt, you only have 3-6 months to
pay the value if the property above your exemptions to the Trustee, or
you must turn the property over to the Trustee.
- You cannot change the terms of a mortgage or a vehicle loan.
Chapter 13 Pro’s
- You are behind on mortgage payments and you want to keep your home.
- You are behind on car payments and you want to keep your car.
- You own property that you cannot exempt, and you want to keep that property.
- Your income is too high for you to qualify for a Chapter 7.
- You can strip a second mortgage on your home, provided your home is worth
less than the first mortgage.
- You have pay back taxes over 36-60 months, and interest and penalties stop
accruing on tax debt.
- You only have to pay your unsecured creditor exactly what they would be
entitled to in a Chapter 7-but with the Chapter 13, you get to pay that
back over time.
- For those with high incomes, it allows you to restructure your debt and
almost definitely will drastically reduce the monthly payments you were
paying prior to filing.
Chapter 13 Con’s
- You are in bankruptcy for 36-60 months.
- You need permission from the Trustee to obtain any new debt, such as for
a vehicle.
- You have to turn in your tax returns every year to the Trustee, and may
lose any refund.
- A large increase in income may result in increased payments.
- An inheritance may increase your payments.
There are many more differences between Chapter 7 and Chapter 13. Keith
Wynne is prepared to take full advantage of the law in order to help you
obtain maximum debt relief while enabling you to keep your property.
