Reviewed by Main AI · Updated July 2026
Chapter 7 wipes out most unsecured debt quickly by liquidating non-exempt assets. Chapter 13 sets up a 3-5 year repayment plan, letting you keep assets and catch up on things like a mortgage.
The two main consumer bankruptcies work very differently. Chapter 7 ("liquidation") discharges most unsecured debts — credit cards, medical bills — relatively fast, but you generally must pass an income means test and may give up non-exempt property. Chapter 13 ("reorganization") is for people with regular income who want to keep assets: you repay some or all debt over 3-5 years through a court-approved plan, which can stop foreclosure and let you catch up on a mortgage. Which fits depends on your income, assets, and goals.
Chapter 7 is typically much faster — often a few months — while Chapter 13 involves a 3-5 year repayment plan before discharge.
Chapter 13 is often used specifically to keep a home and catch up on missed mortgage payments; Chapter 7 may risk non-exempt equity depending on your state’s exemptions.
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