Find Out Which Bankruptcy Option is Right for Your Situation
Choosing between Chapter 7 and Chapter 13 bankruptcy hinges on your financial goals and situation. If we aim to quickly eliminate unsecured debts and you meet the income requirements, Chapter 7 can offer a fresh start within 3-6 months.
See the key differences at a glance
Choosing the right bankruptcy depends on your debt type, income, and assets. Chapter 7 is ideal for discharging unsecured debts if your income is below the median for your household size, while Chapter 13 helps if you're aiming to keep assets like a home or car and can commit to a 3-5 year repayment plan.
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Chapter 7 bankruptcy typically resolves within 3-6 months, offering a quick path to debt relief, with most unsecured debts discharged after about 90-120 days. In contrast, Chapter 13 bankruptcy spans 3-5 years, requiring adherence to a repayment plan based on your income, but it can stop a foreclosure and allow you to keep most of your property.
See how each bankruptcy type progresses
File petition, automatic stay begins
341 Meeting of Creditors
Creditor objection deadline
Discharge granted, case closed
Fresh start achieved!
File petition & proposed plan
Begin plan payments
341 Meeting of Creditors
Plan confirmation hearing
Complete payment plan
Discharge & fresh start!
If your income falls below the Texas median of approximately $59,570 for individuals, and you're overwhelmed by unsecured debt without significant assets, Chapter 7 bankruptcy can offer a swift discharge, typically within 4-6 months. Conversely, Chapter 13 suits those above the median income needing to safeguard assets and manage mortgage arrears, allowing a structured repayment plan over 3-5 years.
Choose the situation that best describes you
Contrary to popular belief, filing for Chapter 7 doesn't mean you'll lose everything. In Texas, exemptions allow you to keep essential assets, including your home, car, and personal items, with 93% of filers retaining all their possessions. While many assume Chapter 13 is preferable for homeowners, it's not always the case, especially if you're current on your mortgage and face limited debt elsewhere.
Don't let misinformation guide your decision
Many people believe Chapter 7 means losing all your possessions.
People assume if you own a home, Chapter 13 is automatically the best choice.
Some think Chapter 7 is available to anyone who wants it.
Many fear they'll never recover financially after bankruptcy.
Get answers to common Chapter 7 vs 13 questions
Chapter 7 is a "liquidation" bankruptcy that discharges most debts in 3-6 months, but requires passing a means test based on income. Chapter 13 is a "reorganization" bankruptcy where you repay debts through a 3-5 year payment plan, allowing you to keep all assets and catch up on secured debts like mortgages.
You qualify for Chapter 7 if your household income is below the Texas median ($65,597 for 1 person, $84,771 for 2 people, $97,190 for 3 people, $117,717 for 4 people in 2024). If above median, you can still qualify by passing the means test, which considers your expenses and disposable income.
Chapter 7: You can keep them if you're current on payments and they're protected by Texas exemptions. Chapter 13: You can keep them even if behind on payments by catching up through your repayment plan. Chapter 13 also allows "cramdown" to reduce car loans to the vehicle's actual value.
Chapter 7 is much faster, typically completed in 3-6 months. Chapter 13 requires a 3-5 year payment plan before discharge. However, both provide immediate relief through the automatic stay, which stops collections, garnishments, and foreclosures the moment you file.
Both chapters generally cannot discharge: student loans (unless extreme hardship), recent tax debt, child support, alimony, criminal fines, and debts from fraud. However, Chapter 13 can provide structured payment plans for these non-dischargeable debts.
Chapter 7: $338 court filing fee + $975-$1,500 attorney fees in Texas. Chapter 13: $313 court filing fee + $1,500-$2,000 attorney fees. Chapter 13 attorney fees can often be paid through your payment plan, while Chapter 7 fees are typically paid upfront.
Choosing the right bankruptcy chapter hinges on your specific financial situation, including your income and debts. For a single filer in Texas, the median income limit for Chapter 7 bankruptcy in 2024 is $65,597. We can help analyze your finances to determine the best path forward during a free consultation.
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