Chapter 7 vs. Chapter 13 Bankruptcy
Which One Should You File?
By Juan C. Burgos, Esq. | Florida Bar #84056 | Bankruptcy Attorney, Orlando FL
TL;DR: Chapter 7 wipes out your eligible debts in 3 to 5 months by liquidating non-exempt assets — in Florida, most filers keep everything anyway thanks to broad exemptions. Chapter 13 doesn't liquidate anything; instead you keep all your property and repay creditors (fully or partially) over a 3-to-5-year court-approved plan. The chapter that actually fits you comes down to two questions: does your income pass the means test, and do you have something specific — a house in foreclosure, a car payment behind, non-exempt assets you can't afford to lose — that Chapter 13's structure protects and Chapter 7's doesn't.
If you're comparing "Chapter 7" and "Chapter 13," you've probably heard both terms thrown around like they're interchangeable ways to "file bankruptcy." They're not. They solve different problems, for different situations, and picking the wrong one can mean losing property you didn't have to lose — or spending five years in a repayment plan you never needed to be in. Here's what actually separates them, and how to tell which one is built for your situation.
What Chapter 7 Actually Does
Chapter 7 is liquidation. A trustee is appointed to your case, has the authority to sell any non-exempt assets, and distributes the proceeds to creditors. In practice, for most individual filers in Florida, this is less dramatic than it sounds — Florida's exemptions (homestead, a vehicle, retirement accounts, a personal-property wildcard) are broad enough that the large majority of consumer Chapter 7 cases are "no-asset" cases, meaning nothing is actually sold. You file, attend one short meeting with your trustee, complete a required financial-management course, and your eligible debts are discharged — typically 3 to 5 months from filing to discharge.
The tradeoff is eligibility. Chapter 7 has an income-based means test: if your household income is below Florida's median for your family size, you qualify automatically. If you're above it, a series of allowed expense deductions can still clear your path — but if your income is too high and your expenses don't bring you under the line, Chapter 7 isn't available to you at all. There's also no mechanism in Chapter 7 to catch up on a missed mortgage or car payment; if you're behind and want to keep the property, Chapter 7 alone won't stop that clock.
What Chapter 13 Actually Does
Chapter 13 is reorganization, and it's only available to individuals — businesses can't file it. Nothing is liquidated. Instead, you propose a repayment plan, typically 3 to 5 years, and make one monthly payment to a trustee who distributes it to your creditors according to the plan the court confirms. You keep every asset you own, exempt or not, as long as the plan pays creditors at least what they'd have received in a Chapter 7 liquidation and you complete it.
This structure is what makes Chapter 13 the right tool for specific situations Chapter 7 can't solve: falling behind on a mortgage and wanting to catch up over time instead of losing the house to foreclosure, having income too high to qualify for Chapter 7, or owning something — a car with equity, a second property, a small non-exempt asset — that you don't want a trustee selling. Chapter 13 can also reduce some secured debts (a car loan financed more than 910 days before filing can sometimes be "crammed down" to the vehicle's actual value) in ways Chapter 7 simply can't touch.
Own a small business instead of filing personally?
Chapter 13 is individual-only — a business itself can't file it. If you're weighing your options as a business owner, the comparison you actually need is Chapter 7 vs. Subchapter V, or — if your personal debt is too large for Chapter 13's limits below — our Chapter 11 vs. Chapter 7 breakdown.
Chapter 7 vs. Chapter 13: The Core Difference
Chapter 7 — Liquidation
Non-exempt assets sold (rare in Florida); eligible debts discharged in 3–5 months; no ongoing payment plan; must pass the means test.
Chapter 13 — Reorganization
Keep every asset; repay creditors over a 3–5 year court-approved plan; can catch up on mortgage/car arrears; hard debt limits apply.
| Feature | Chapter 7 | Chapter 13 |
|---|---|---|
| Who can file | Individuals & businesses | Individuals only |
| What happens to property | Non-exempt assets can be sold (uncommon in FL) | You keep everything, exempt or not |
| Eligibility test | Income means test | Regular income + hard debt limits |
| Debt limit | None | $1,580,125 secured / $526,700 unsecured |
| Typical timeline | 3–5 months | 3–5 year plan |
| Stops foreclosure/repo long-term? | Only temporarily (automatic stay) | Yes — arrears get built into the plan |
| Credit report | Up to 10 years (FCRA cap) | Often removed after 7 years (bureau policy) |
One Thing People Get Wrong About Credit Reporting
Both chapters can legally stay on a credit report for up to 10 years from the filing date — that's the cap set by the Fair Credit Reporting Act (15 U.S.C. §1681c(a)(1)), and it applies the same way to every chapter. In practice, though, the three major credit bureaus voluntarily remove Chapter 13 cases after just 7 years, because a completed repayment plan is treated as lower risk than a straight liquidation. That's a bureau policy choice, not a shorter legal deadline — Chapter 13 doesn't come with a law-mandated shorter reporting window, it just tends to get removed sooner in practice.
Which One Actually Applies to You?
✔ Chapter 7 is likely the fit if…
Your income is under the Florida median, or you pass the means test after deductions
You don't own significant non-exempt assets
You want the fastest possible path to a discharge
✔ Chapter 13 is likely the fit if…
You're behind on a mortgage or car payment and want to keep the property
Your income is too high to pass the Chapter 7 means test
You own non-exempt assets you don't want a trustee selling
Not sure where your income lands?
Our Florida Means Test Calculator gives you a fast, free read on whether you pass the Chapter 7 income test — the single biggest factor in which chapter actually fits.
Can You File One After Already Filing the Other?
Yes, but not immediately — bankruptcy law imposes waiting periods before you can get a second discharge, measured from your prior case's filing date, not its discharge date:
Chapter 7 → Chapter 7: 8 years
Chapter 7 → Chapter 13: 4 years
Chapter 13 → Chapter 7: 6 years (waived if your Chapter 13 plan paid unsecured creditors in full, or at least 70% in a good-faith, best-effort plan)
Chapter 13 → Chapter 13: 2 years
Still Not Sure Which Chapter Fits?
A free consultation is the fastest way to know for certain — we'll walk through your income, your assets, and what you're actually trying to protect.
Frequently Asked Questions
What's the single biggest difference between Chapter 7 and Chapter 13?+
Chapter 7 liquidates non-exempt assets and discharges debt in 3 to 5 months with no repayment plan. Chapter 13 liquidates nothing — you keep everything and repay creditors over a 3 to 5 year court-approved plan instead.
Will I lose my house or car if I file Chapter 7?+
Usually not, thanks to Florida's broad exemptions — but Chapter 7 has no mechanism to catch up on missed payments. If you're behind on a mortgage or car loan and want to keep the property while catching up over time, Chapter 13 is built for that specific situation.
Does Chapter 13 hurt my credit more than Chapter 7?+
No — if anything, credit bureaus tend to remove Chapter 13 from your report sooner. Both chapters can legally stay on a report up to 10 years under the Fair Credit Reporting Act, but bureaus voluntarily remove completed Chapter 13 cases after about 7 years as a matter of policy.
Can a business file Chapter 13?+
No — Chapter 13 is only available to individuals. Business owners deciding between liquidating and reorganizing should compare Chapter 7 to Subchapter V instead, a faster, cheaper version of Chapter 11 built specifically for small businesses.
Is there an income limit for Chapter 13 like there is for Chapter 7?+
Not an income limit — Chapter 13 requires "regular income" but doesn't cap how high it can be. Instead it caps your debt: as of April 1, 2025, you can't have more than $1,580,125 in secured debt or $526,700 in unsecured debt, tracked separately, to qualify.
How soon can I file Chapter 13 if I already filed Chapter 7?+
Four years from the filing date of your prior Chapter 7 case, not the discharge date. The waiting periods run the other way too — 6 years from a Chapter 13 to file Chapter 7 (shorter if the Chapter 13 plan paid creditors in full or close to it), 8 years Chapter 7 to Chapter 7, and 2 years Chapter 13 to Chapter 13.
Not Sure Which Chapter Fits Your Situation?
Get a free, confidential consultation — English or Spanish. We'll help you figure out whether Chapter 7, Chapter 13, or something else entirely is the right move.
This article is for general educational purposes and does not constitute legal advice or create an attorney-client relationship. Attorney Juan C. Burgos is a federally designated debt relief agency helping families and businesses file for relief under the United States Bankruptcy Code.
Juan was great. Highly recommend his office! The situation was on a really tight timeline and he followed through. He was very empathic without sugar coating anything. Communication was always open an… Juan was great. Highly recommend his office! The situation was on a really tight timeline and he followed through. He was very empathic without sugar coating anything. Communication was always open and timely. Appreciate the extra steps he took to make sure the case was solid and felt very prepared for the hearing.
Muy agradecida con el licenciado Burgos, Excelente trabajo, explicación al 100% y manejo de caso muy profesional. Experiencia única. Mi caso llego a complicarse con la Trustee sin embargo el licenciad… Muy agradecida con el licenciado Burgos, Excelente trabajo, explicación al 100% y manejo de caso muy profesional. Experiencia única. Mi caso llego a complicarse con la Trustee sin embargo el licenciado manejo la situación al nivel que sali victoriosa. Estan en excelentes manos.
Exelente trabajo muy satisfecha con los resultados de un buen abogado y el trato exelente
El Lic Burgos desde el primer momento en que me comuniqué con él me mostró atención y profesionalidad. Lo recomiendo enteramente por su transparencia y su din de escuchar tu situación, gracias Lic Bur… El Lic Burgos desde el primer momento en que me comuniqué con él me mostró atención y profesionalidad. Lo recomiendo enteramente por su transparencia y su din de escuchar tu situación, gracias Lic Burgos.
El Sr. Burgos fue el único abogado que se reunió conmigo y aceptó mi caso pocos días antes de mi audiencia de bancarrota. Llamé a todos los abogados de Kissimmee y Orlando, e incluso los más prestigio… El Sr. Burgos fue el único abogado que se reunió conmigo y aceptó mi caso pocos días antes de mi audiencia de bancarrota. Llamé a todos los abogados de Kissimmee y Orlando, e incluso los más prestigiosos no me trataron como él. Hablé con varios abogados; algunos rechazaron mi caso porque no hablaban español, y otros lo rechazaron por diferentes razones. Le doy cinco estrellas y lo recomiendo ampliamente por su excelente trabajo y buena comunicación.