When choosing Chapter 7 or Chapter 13, a debtor must consider his or her income level and available resources. Chapter 7 bankruptcy can be a strong choice for debtors with below-median income who own little or no non-exempt assets. Chapter 13 bankruptcy, by contrast, targets those debtors with higher income and/or non-exempt assets that they wish to keep. Chapter 13 debtors must make monthly plan payments under a plan approved by the Bankruptcy Court. The length of the plan can range from a minimum of three years to a maximum of five years. The amount of the plan payments will vary depending on the debtor's income, the amount of non-exempt assets and a number of other factors.
Because it involves a process of debt repayment over time, Chapter 13 bankruptcy tends to take longer to discharge than a Chapter 7 program. Chapter 7 tends to result in a quicker discharge and is usually completed in 3 to 4 months as opposed to 3 to five years. However, Chapter 7 does not offer the debtor as many options to deal with secured debts such as car and house payments on which the debtor may be behind. Chapter 13 debtors have access to programs such as lien stripping, which may allow the removal of certain wholly unsecured liens on property. A bankruptcy attorney can provide more information on this and other provisions of the Chapter 7 and Chapter 13 codes.