Chapter 7 vs Chapter 13 Bankruptcy and How to File Yourself

Introduction

If you are considering bankruptcy, one of the first things you need to understand is the difference between Chapter 7 and Chapter 13 bankruptcy. These are the two most common types of personal bankruptcy in the United States.

Many people also do not realize that it is possible to file bankruptcy yourself without a lawyer and, in some cases, even have the filing fees waived if your income is low enough.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy is often called liquidation bankruptcy. It eliminates most unsecured debts such as credit card debt, medical bills, personal loans, and collections. Chapter 7 usually takes about 3 to 6 months from filing to discharge.

Benefits of Chapter 7

• Eliminates unsecured debt
• Fast process
• No long repayment plan
• Fresh start quickly
• Can rebuild credit sooner

Downsides of Chapter 7

• Must qualify using income through the means test
• May lose non-exempt assets
• Stays on credit report for 10 years

Chapter 13 Bankruptcy

Chapter 13 bankruptcy is a repayment plan bankruptcy. Instead of eliminating all debt immediately, you make monthly payments to a trustee for 3 to 5 years.

Chapter 13 is often used if someone:

• Makes too much money for Chapter 7
• Is behind on a mortgage
• Is behind on a car loan
• Wants to keep assets
• Has tax debt
• Has child support arrears

Benefits of Chapter 13

• Keep your house
• Keep your car
• Stop foreclosure
• Stop repossession
• Payment plan for debts

Downsides of Chapter 13

• 3–5 year payment plan
• Must have steady income
• Takes longer to recover financially
• Stays on credit report for 7 years

Quick Comparison

Can You File Bankruptcy Yourself?

Yes, you can file bankruptcy yourself. This is called filing pro se. Many people file Chapter 7 without a lawyer, especially if their case is simple.

You may be able to file yourself if you have:

• Mostly credit card debt
• No business
• No lawsuits
• No recent asset transfers
• No large assets
• Simple income situation

Chapter 13 is much harder to file without a lawyer because it involves a repayment plan.

Steps to File Chapter 7 Yourself

1. Pull your credit reports
2. List all debts and creditors
3. Complete credit counseling course
4. Fill out bankruptcy forms
5. File forms with bankruptcy court
6. Pay filing fee or request fee waiver
7. Attend 341 meeting of creditors
8. Complete debtor education course
9. Receive discharge

Bankruptcy Filing Fees and Fee Waiver

If your income is low, you may qualify for a Chapter 7 filing fee waiver. You must have income below 150% of the poverty level and show that you cannot pay the fee in installments. If you do not qualify for a fee waiver, you can usually ask to pay the filing fee in installments instead.

Final Thoughts

Chapter 7 and Chapter 13 bankruptcy are designed to help people get a financial fresh start. Chapter 7 is usually faster and eliminates unsecured debt, while Chapter 13 involves a repayment plan over several years.

Many people can file Chapter 7 themselves if their case is simple, and in some cases, the filing fees can be waived if income is low enough. Bankruptcy is a legal tool to help people recover financially, and understanding the process can make it much less stressful.