This article is for information purposes only and should not be construed as legal or financial advice. If you would like a free bankruptcy consultation with an attorney who serves your city, you can call us at 833-272-3631.
Filing for bankruptcy can feel overwhelming, especially when deciding between Chapter 7, Chapter 11, and Chapter 13 bankruptcy.
Chapter 7 and Chapter 13 bankruptcy are often the chapters that consumers file, while Chapter 11 bankruptcy is often what businesses file.
As such, we built a free Chapter 7 vs. Chapter 13 calculator that I will discuss below to help you estimate whether you qualify for Chapter 7 and what your Chapter 13 monthly plan payment would be based on the official US bankruptcy forms. The calculator is built for all 50 states.
Each chapter serves a unique purpose, depending on your financial situation. In this guide, I’ll break down the differences to help you make an informed decision.
Chapter 7 Bankruptcy: The Basics
Chapter 7 bankruptcy, also known as "liquidation bankruptcy," is a fast and cost-effective option for individuals with limited income who cannot pay their debts.
It's often the CHEAPEST and FASTEST option for debt relief. Suppose you do not believe you can afford any filing fee or attorney fee. In that case, you can
take our estimator that estimates whether you qualify for a
100% free Chapter 7 bankruptcy estimator where your filing fees could be waived.
Key Features:
Speed: Chapter 7 cases are typically resolved within 90 to 120 days.
Cost: Filing fees are around $338, and attorney fees range from $1,000 to $3,000.
Asset Impact: Some assets may be liquidated to repay creditors, but exemptions often protect essentials like your home, car, and personal belongings.
Eligibility: Qualification is based on your household size, income, and state of residence. The means test determines if your income is low enough to qualify.
Pros:
Quick discharge of debts (around four months).
Relatively inexpensive compared to other bankruptcy types.
Stops debt-collection lawsuits.
Cons:
Potential loss of non-exempt assets.
Negative impact on credit report (stays on your credit report for 10 years).
Certain debts, like student loans and some taxes, may not be discharged
Chapter 13 Bankruptcy: The Repayment Plan
Chapter 13 bankruptcy is designed for individuals with a steady income who can repay a portion of their debts over time.
Key Features:
Timeline: Monthly repayment plans last 3 to 5 years.
Cost: Filing fees are $313, and attorney fees typically range from $2,500 to $7,000, with some fees included in your repayment plan.
Asset Protection: You can keep all your assets, even if their equity exceeds bankruptcy exemptions.
Eligibility: Available to individuals with less than $465,275 in unsecured debt and $1,395,875 in secured debt (as of the latest federal limits).
Pros:
Allows you to save your home from foreclosure.
Helps manage tax debts and domestic support arrears.
Stops evictions and car repossessions in some cases.
Cons:
Longer timeline (3 to 5 years).
Higher overall costs due partially to attorney and trustee fees.
Negative impact on credit report (stays on your credit report for 7 years).
Do You Qualify For Chapter 7? What's Your Estimated Chapter 13 Plan Payment?
Based on the above information, you may wonder whether you qualify for Chapter 7 bankruptcy, how much your estimated Chapter 13 plan payment would be.
As such, we built the following free Chapter 7 vs Chapter 13 calculator to help you estimate each of those things, including the pros and cons of both option and alternative non-bankruptcy options.
Chapter 11 Bankruptcy: For Businesses and High-Debt Individuals
Chapter 11 bankruptcy is typically used by businesses or individuals with substantial debts who want to restructure and continue operations.
Key Features:
Timeline: It can take several years to finalize.
Cost: Attorney fees range from $10,000 to $40,000 or more.
Eligibility: Often used by businesses or individuals with over $419,275 in unsecured debt or $1,257,850 in secured debt.
Pros:
Cons:
How Much Does Each Type of Bankruptcy Cost?
Understanding the costs of bankruptcy is essential:
Chapter 7: Attorney fees range from $1,000 to $3,000, plus a $338 filing fee.
Chapter 13: Attorney fees range from $2,500 to $7,000, with a $313 filing fee.
Chapter 11: Attorney fees can start at $10,000, with additional court costs and quarterly payments.
How Bankruptcy Affects Your Credit
Bankruptcy can significantly impact your credit, but the extent depends on the type filed:
Chapter 7: Remains on your credit report for 10 years.
Chapter 13: Remains on your credit report for 7 years.
Credit Score: Your score may drop by 100-150 points but can recover over time. Some filers report being eligible for secured credit cards or loans shortly after discharge.
Which Chapter Should You File?
The decision may depend on your financial situation:
For personalized guidance, consider using our
free bankruptcy calculator to estimate costs and eligibility based on your location and circumstances.
Conclusion
Bankruptcy can be a powerful tool to regain financial stability. That said, it may be difficult to know which option is best for you.
If helpful, consider taking the Chapter 7 vs Chapter 13 calculator below.
If you’re still unsure, you can contact us at 833-272-3631, and we can pair you with a bankruptcy attorney who can provide a free consultation.
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