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Chapter 7 wipes out most unsecured debt in a few months and suits people whose income falls below the California median. Chapter 13 repays part of what you owe over three to five years and suits higher earners, and anyone who needs to catch up on a mortgage or car loan to keep the property.
Most people do not actually get a free choice. Your income decides whether Chapter 7 is open to you, and your goals decide whether it is the right one even if it is.
The short comparison
| Chapter 7 | Chapter 13 | |
|---|---|---|
| How it works | Qualifying debt is discharged | You repay part of it over a court-approved plan |
| Length | A few months | Three to five years |
| Who qualifies | Must pass the means test | Needs regular income; debt limits apply |
| Mortgage arrears | Cannot cure them | Cures them over the plan |
| Attorney fees | Flat fee, normally before filing | Part up front, rest through the plan |
| Credit report | Up to 10 years from filing | Up to 7 years from filing |
Do you qualify for Chapter 7? The means test
The means test compares your average household income over the six calendar months before filing against the California median for a household of your size. The figures are published by the United States Trustee Program and revised periodically.
Below the median: you qualify. Straightforward.
Above the median: you are not disqualified yet. A second calculation deducts allowed living expenses, secured debt payments and certain other amounts to work out your disposable income. Plenty of above-median households still pass.
Two practical points people miss. First, household size includes dependants, and getting it right matters. Second, because the test looks backwards six months, timing can change the answer — if you have recently lost income or hours, waiting can move you below the line.
When Chapter 13 is the better answer even if you qualify for Chapter 7
You are behind on your mortgage and want to keep the house. This is the big one. Chapter 7 does not cure arrears — it pauses the foreclosure and then the lender resumes. Chapter 13 cures the arrears over the plan, and the court confirms it whether or not the lender agrees.
You are behind on a car loan. Same logic. Chapter 13 can bring the loan current inside the plan.
You have more equity than the exemptions cover. Rare for most households, but if it applies, Chapter 7 could put an asset at risk while Chapter 13 lets you keep it and pay the value into the plan.
You have tax debt or support arrears that survive discharge. Chapter 13 lets you pay these off in a structured plan with creditors held back by the stay while you do it.
You have filed before. Statutory waiting periods apply between discharges, and they differ by chapter. A previous Chapter 7 may leave Chapter 13 available sooner.
What both chapters do for you immediately
The automatic stay applies in both, from the moment of filing:
- Wage garnishments stop
- Collection calls and letters stop
- A scheduled foreclosure sale is halted
- Repossession efforts stop
- Most lawsuits are frozen
If you are dealing with an urgent deadline, both buy you immediate relief. The chapter choice is about what happens next.
What neither chapter erases
- Child support and spousal support
- Most recent income taxes, though older tax debt sometimes qualifies
- Student loans, absent a separate showing to the court
- Court fines and most criminal restitution
- Debts established to have been incurred by fraud
The honest framing
Chapter 7 is faster, cheaper and cleaner — it is the right answer for most people who qualify. Chapter 13 exists for two groups: those who earn too much for Chapter 7, and those with property to save that Chapter 7 cannot protect. If someone recommends Chapter 13 and you have no arrears, no excess equity and below-median income, ask them to explain why.
Find out which one applies to you — free
The means test calculation takes a few minutes with the right documents in front of us. Bring six months of pay stubs, your last two tax returns, a rough list of your debts and any mortgage or vehicle statements.
Hedtke Law Firm — 7426 Cherry Ave, Suite 210-312, Fontana, CA 92336
Call (909) 457-0054
Related: Chapter 7 · Chapter 13 · how to file Chapter 7 step by step · what it costs · Fontana bankruptcy attorney
About the author. Neil R. Hedtke is a bankruptcy attorney admitted to the State Bar of California in 2010 (Bar No. 273319). He earned his law degree at the University of La Verne College of Law, has practiced for 16 years and has filed approximately 3,000 bankruptcy cases in the Inland Empire.
General information about California bankruptcy procedure, not legal advice for your specific circumstances. Median income figures, exemption amounts and debt limits change periodically — verify current values.