Should you file for bankruptcy under Chapter 7 or 13.

Chapter 7 bankruptcy is a total liquidation where you will eliminate all of your unsecured debt, i.e. debts where assets are not held as collateral while being able to continue to pay secured debts, i.e. debts where assets are held as collateral for the repayment of the debts. Chapter 13 is a repayment plan where your secured debts may be able to be restructured and a portion of your unsecured debt is repaid. Certain forms of debt cannot be discharged, including most taxes, student loans and child or spousal support. The choice of 7 or 13 may not be up to the person filing.

  1. If a Chapter 7 case has been filed within the past 8 years, only a Chapter 13 can be filed;
  2. If the income exceeds a maximum allowable amount based on Means Test, a Chapter 13 would be required;
  3. If payments are in arrears on secured debts, i.e. house, vehicle, etc, and the secured item is to be kept, a Chapter 13 would be required;
  4. If values exceed exemptions on assets to be kept, a Chapter 13 might be required;
  5. A 2nd or 3rd mortgage can be avoided in a Chapter 13 if the 1st mortgage amount exceeds fair market value of the property;
  6. If taxes are to be handled in any way except full payment, a Chapter 13 would be required;
  7. Interest rates and amounts owed on secured debts, other than mortgages, may be able to be reduced in a Chapter 13; and
  8. If student loans are attaching wages or pressing for collection, a Chapter 13 could reduce the amount required to be paid per month.

The first thing you should do, if you are considering bankruptcy, is to find a competent attorney. The most important thing you will need when filing is good legal advice to protect your assets and make good decisions.


Ronald R. Stanley, Esq. has assisted individuals file Chapter 7 and 13 Bankruptcy for over 40 years. He is a member of the bar in Ohio (1974), Northern Ohio Federal District Court (1974) and 6th Circuit Federal Appeals Court (1977). 3637 Medina Road #5 in Medina, Ohio 44256, 330-952-1415 Phone, [email protected] email, website