Quick Chapter Finder
1. Is your household income above your state's median?
2. Are you behind on your mortgage or car payments?
3. Do you have a cosigner on any of your debts?
Step 1: Do You Pass the Means Test?
The Income Question
The means test is the first gate. It compares your household income over the past 6 months to your state's median income for a household of your size.
If your income is below the state median: You pass the means test and qualify for Chapter 7. Move to Step 2.
If your income is above the state median: A detailed expense calculation determines whether you have enough disposable income to fund a Chapter 13 plan. If your disposable income is too high, you may be directed to Chapter 13.
Below median income: Chapter 7 is likely available. Continue to Step 2 to confirm it is the right choice.
Above median income with significant disposable income: Chapter 13 is likely your path. But continue - there may be reasons Chapter 13 is preferable even if you pass the means test.
Check your eligibility: Use the free means test calculator at meanstest.org to determine whether you pass. Median income thresholds vary by state and household size and are updated periodically.
Step 2: Do You Have Assets at Risk?
The Property Question
In Chapter 7, a trustee can sell non-exempt assets to pay creditors. The key is whether your assets fall within your state's exemption limits.
Common exemptions include:
- Homestead exemption: Protects equity in your primary residence (varies widely - $5,000 in some states to unlimited in Texas/Florida)
- Vehicle exemption: Typically $2,000-$6,000 in equity
- Personal property: Household goods, clothing, tools of the trade
- Retirement accounts: 401(k), IRA, pension - fully exempt in all states
- Wildcard exemption: Available in some states for any property
All assets within exemptions: Chapter 7 is still a good option. Most Chapter 7 cases are "no-asset" cases.
Significant non-exempt assets: Chapter 13 lets you keep everything. You pay the value of non-exempt assets through your plan instead of surrendering them.
Step 3: Are You Behind on Your Mortgage or Car?
The Secured Debt Question
If you are behind on a mortgage or car loan and want to keep the property, this is one of the most important factors.
Current on all secured debts: Chapter 7 works. You reaffirm the loan and keep paying.
Behind on mortgage: Chapter 13 is specifically designed to cure mortgage arrears. You catch up over 3-5 years while staying in your home. Chapter 7 cannot cure mortgage arrears.
Behind on car loan: Chapter 13 can cure car loan arrears. If your loan is more than 910 days old, you may be able to cramdown the loan to the car's current value - potentially saving thousands.
Step 4: Do You Have Cosigners?
The Cosigner Question
In Chapter 7, the automatic stay protects you but not your cosigners. Creditors can immediately pursue cosigners for the full debt balance.
In Chapter 13, the codebtor stay (11 U.S.C. § 1301) protects cosigners on consumer debts during your plan. As long as you are paying the debt through the plan, creditors cannot collect from your cosigner.
No cosigners (or cosigners can handle the debt): Chapter 7 is fine.
Cosigners you want to protect: Chapter 13's codebtor stay shields them during the plan. This is especially important for parent PLUS loans, cosigned car loans, and cosigned credit cards.
Step 5: Have You Filed Bankruptcy Before?
The Prior Filing Question
Federal law imposes waiting periods between discharges. If you have a prior bankruptcy, check these windows:
- Prior Chapter 7: Must wait 8 years for another Chapter 7 discharge, but only 4 years for a Chapter 13 discharge
- Prior Chapter 13: Must wait 6 years for a Chapter 7 discharge (with exceptions), but only 2 years for another Chapter 13 discharge
Check your dates: Use the free discharge eligibility screener at 1328f.com to calculate your specific waiting period based on your prior filing date and chapter.
The Decision Summary
Chapter 7 is commonly used when filers: pass the means test, hold assets within exemption limits, are current on secured debts, have no cosigners requiring codebtor-stay protection, and want the fastest path to a fresh start. The 93%+ discharge rate and 3-4 month timeline are why this chapter is frequently selected by qualifying filers.
Chapter 13 is commonly used when filers: are behind on a mortgage they want to keep, have non-exempt assets to protect, do not pass the means test, need cosigner protection, or need the superdischarge. The 40-50% national discharge rate means realistic budgeting and stable 3-5 year income are central to whether the plan completes.
Frequently Asked Questions
Related Resources
- Complete Comparison Chart
- Cost Comparison
- Keeping Your Property
- meanstest.org - Free means test calculator
- chapter13plan.org - Chapter 13 plan details
- section1328.org - Discharge timing rules
Last updated: March 2026. This is educational information, not legal advice.
Cited in Federal Rules Suggestions 26-BK-3 and 26-BK-5