Chapter 7 wipes out debt in about four months and is the answer for most people whose income is under the California median and whose property fits inside the exemptions. Chapter 13 is a three-to-five-year plan for people who are behind on a house or car, earn too much for Chapter 7, or own something they'd otherwise lose. Four questions decide it.
The four questions
Income first. If your household's gross income over the last six full months is below the California median for your household size ($79,253 for one person, $102,797 for two, $116,541 for three, $139,071 for four, as of April 2026), you pass the means test and Chapter 7 is open to you. Above it, you go to a second calculation, and if that one fails too, Chapter 13 is the route.
Equity second. Add up what you own, subtract what's owed on it, and compare the result to the California exemptions. If everything fits, a Chapter 7 trustee has nothing to sell. If there's a $150,000 gap on a house, Chapter 13 lets you keep the house and pay the unsecured creditors that value over five years instead.
Third, are you behind on a secured debt you want to keep? Chapter 7 discharges the personal liability on a mortgage or car loan but doesn't cure the default. Chapter 13 does.
Fourth, prior filings. A Chapter 7 discharge inside eight years blocks another one. A Chapter 13 is often still available.
Side by side
The table is the short version. Everything on it has exceptions, and the exceptions are where the first call earns its thirty minutes.
| Chapter 7 | Chapter 13 | |
|---|---|---|
| How long | About 3 to 4 months | 36 or 60 months |
| Who qualifies | Pass the means test | Regular income; debts under roughly $526,700 unsecured and $1,580,125 secured |
| What happens to unsecured debt | Discharged at the end | Paid a percentage through the plan, rest discharged |
| Behind on the mortgage | Delays the sale; doesn't cure the default | Stops the sale and spreads arrears over the plan |
| Non-exempt property | Trustee sells it | You keep it and pay its value through the plan |
| Underwater second mortgage | Stays on the house | Can be stripped off entirely |
| Car loan older than 910 days | Pay the balance, or redeem in a lump sum | Can be crammed down to the car's value |
| Co-signers | Not protected | Protected by the co-debtor stay |
| Attorney fee | $1,850 flat, paid before filing | $7,000 court-set, mostly paid through the plan |
| Court fee | $338 (waiver possible) | $313 (no waiver) |
| On the credit report | Up to 10 years | Up to 7 years |
| File again | 8 years after a prior Chapter 7 | 2 years after a prior Chapter 13 |
When income pushes you into Chapter 13
A married couple in Culver City with two kids and $145,000 in household income is over the four-person median. That doesn't end the Chapter 7 conversation, because the second step of the means test deducts the mortgage, the car payments, taxes and standardized living expenses. If what's left is small enough, Chapter 7 is still available.
If what's left is large, the Bankruptcy Code presumes Chapter 7 would be an abuse, and the answer is a Chapter 13 plan that pays unsecured creditors that surplus for 60 months. That's not a punishment. For a lot of families it's a $600 monthly payment that replaces $2,400 in minimums, and at the end the balance is gone.
Timing can change the result. Six months of income is the window, so a layoff, a bonus that has already been paid, or a spouse who just stopped working all move the number. Naomi looks at the calendar before she looks at anything else.
When the house or the car decides it
You're current on everything and your equity is under the homestead. Chapter 7. You're four payments behind on a house in Sherman Oaks you want to keep. Chapter 13, because only Chapter 13 forces the lender to accept the arrears over time.
The car works the same way. Current, little equity, you keep it in Chapter 7 by keeping the payments up. Behind, or paying 24% on a loan that's three years old, Chapter 13 can catch up the arrears and cram the loan down to the car's value at a lower rate.
Then there's equity the exemptions don't cover. A paid-off rental property, a second car with real value, a bank balance that's larger than the System 2 wildcard. In Chapter 7, that goes to the trustee. In Chapter 13, you keep it and pay creditors what they would have received, over the plan. Sometimes that math favors Chapter 13 even when Chapter 7 is technically available.
When neither chapter is the right move
About one in seven people who call us are told not to file. Your only debt is student loans, which neither chapter discharges without a separate lawsuit. Your income is Social Security, you rent, and there's nothing a creditor can take, so a judgment is a piece of paper. You had a Chapter 7 discharge six years ago and the new debt is small enough to settle. Those conversations are on when you should not file bankruptcy, and they happen on the first call, before any money changes hands.
The other wrong move is the right chapter done badly. Petition preparers and $500 volume filings produce the same errors year after year: the wrong exemption system, an undisclosed transfer, a reaffirmation that never needed signing, a Chapter 13 plan that was never going to confirm. What goes wrong in a cheap bankruptcy filing lists what we see when those cases land on our desk.
What comes after, in either chapter
A Chapter 7 stays on your credit report up to ten years and a Chapter 13 up to seven, but the practical recovery is faster than either number suggests. Most of our clients see a usable score within 12 to 24 months of discharge. FHA mortgages are possible two years after a Chapter 7 discharge and, with court permission, one year into a Chapter 13. Conventional loans generally take four years after a Chapter 7. The first-90-days plan is on life after discharge.
The fees for both chapters are published on what bankruptcy costs in Los Angeles. And if you'd rather have the answer than read about it, our Beverly Hills bankruptcy practice offers a free thirty-minute consultation with Naomi by video or phone, evenings included. She's a State Bar Certified Specialist in Bankruptcy Law, and this question is most of what she does.
People come in having already decided. They read that Chapter 7 is the good one and Chapter 13 is the punishment, and they want to be told they qualify for the good one. Sometimes I have to say the opposite. A homeowner in Torrance with $200,000 of equity above the homestead doesn't want a Chapter 7 trustee anywhere near that house. A Chapter 13 that pays $900 a month for five years and keeps the house isn't the consolation prize. It's the only plan that works. The right chapter is the one that fits the facts, not the one with the smaller number.
Questions people ask about this
Which is better, Chapter 7 or Chapter 13?
Neither is better in the abstract. Chapter 7 is faster and cheaper if you pass the means test and your property fits the exemptions. Chapter 13 is the one that saves a house in foreclosure, protects excess equity, and strips underwater second mortgages. The facts pick the chapter.
Can I choose Chapter 13 even if I qualify for Chapter 7?
Yes. People do it to protect a co-signer, keep non-exempt property, cure a car loan, or because they'd rather pay something than nothing. It costs more and takes longer, so the reason has to be a real one.
What if I fail the means test?
You go to the second step, which deducts allowed expenses. If you still fail, Chapter 13 is available and the plan payment is roughly the surplus the means test calculated. Occasionally, waiting a few months for the six-month income window to shift changes the result.
Does Chapter 13 hurt my credit less than Chapter 7?
It stays on the report for seven years instead of ten, and some lenders view a completed plan more favorably. In practice, scores rebuild on a similar timeline in either chapter, and an FHA loan is possible sooner after a Chapter 13 with court approval.
Can I switch from one chapter to the other?
Usually. A Chapter 13 can be converted to Chapter 7 if the plan becomes unaffordable and you pass the means test at that point. Converting from 7 to 13 is possible but less common. Conversions are quoted separately from the flat fee.
Talk it through with the attorney
Thirty minutes with Naomi by video or phone will tell you which chapter you qualify for and roughly what the payment or the fee would be. The consultation is free, and about one caller in seven leaves it with advice not to file.