Differences Between Chapter 7 Bankruptcy  and Chapter 13

The two most common options for individual bankruptcy are Chapter 7 and Chapter 13—but which one is better for your situation?

In many cases, Chapter 7 bankruptcy offers faster, simpler, and more complete debt relief than Chapter 13.

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Chapter 7 vs. Chapter 13: A Quick Overview

Feature                Chapter 7                                                                     Chapter 13

Purpose                 Liquidates non-exempt assets to erase debts       Sets up a repayment plan for 3–5 years

Timeline                3–6 months                                                                  3–5 years

Debt Discharge    Most unsecured debts wiped out                            Debts repaid in part/full before discharge

Payments              No monthly payment plan                                        Monthly repayment required

Eligibility                Based on income (Means Test)                                Must have a regular income

Asset Risk              Non-exempt assets may be sold                             Keep assets by repaying debt 

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Top Reasons Chapter 7 May Be Better Than Chapter 13

1. It’s Faster — Get Relief in Months, Not Years

Chapter 7 cases are typically completed within 3 to 6 months, whereas Chapter 13 takes 3 to 5 years to complete.

If you’re looking for a quick financial reset, Chapter 7 gives you the fastest path to a clean slate.

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2. No Repayment Plan

Unlike Chapter 13, Chapter 7 doesn't require you to repay creditors through a court-ordered plan. Once you file, you:

• Stop making payments on most unsecured debts

• Keep your income to support yourself and your family

• Avoid the risk of your case being dismissed for missed payments

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3. Immediate Protection from Creditors

Both Chapter 7 and Chapter 13 offer an automatic stay, which stops:

• Wage garnishments

• Foreclosures

• Repossessions

• Harassing phone calls

But Chapter 7 eliminates many of these debts permanently and faster.

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4. Most People Keep Their Property

There’s a common myth that you’ll lose everything in Chapter 7. In reality, most people keep all of their property due to state and federal bankruptcy exemptions.

In Florida, for example, you can often protect:

• Your home (with unlimited homestead exemption if eligible)

• Your car (up to a certain value)

• Household items, retirement accounts, wages, and more

If you don't have high-value assets, Chapter 7 is usually the better fit.

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5. You May Not Qualify for Chapter 13

To file Chapter 13, you must:

• Have regular income to support the repayment plan

• Stay on top of plan payments for up to 5 years

• Not exceed certain debt limits (updated regularly)

If you're unemployed, underemployed, or have little disposable income, Chapter 7 may be your only viable option.

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When Chapter 13 Might Be Better

While Chapter 7 is ideal for many, Chapter 13 may be better if:

• You're behind on your mortgage and want to catch up and keep your home

• You have non-exempt assets you'd lose in Chapter 7

• You owe certain non-dischargeable debts, like recent taxes or child support

• You want to stop foreclosure or repossession and have a plan to repay

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Need Help Choosing the Right Bankruptcy Option?

At Mosakowski Law, we help individuals and families navigate the bankruptcy process with clarity and confidence. During your free consultation, we’ll:

• Review your income, debts, and assets

• Run a full Chapter 7 Means Test

• Explain the pros and cons of Chapter 7 vs. Chapter 13

• Help you keep as much property as possible

📍 Serving Tampa Bay and the surrounding Florida areas