What is the difference between Chapter 7 and Chapter 13 Bankruptcy?

The path to economic stability will depend on the type of bankruptcy for your situation. Both have benefits that could solve your financial problems, but what’s the catch? 

Chapter 7 Bankruptcy

This is straightforward for those who don’t have a steady income. By choosing this option, you are telling the creditors that you can’t pay and won’t be able to in the future. However, you will have to surrender the nonexempt property to make up for the money you owe: cars, bank accounts, valuable items, etc.

The Pros for Chapter 7

– A bankruptcy trustee will assume complete responsibility for your debt.

– You won’t have to make payments.

– The debt will be completely erased in just a few months.

The Cons for Chapter 7

– You may lose your home if it has enough equity.

– You won’t qualify if your income exceeds the median.

– Your belongings are at stake.

Chapter 13 Bankruptcy

On the other hand, this form of bankruptcy lets you negotiate with creditors and set up a payment plan which lasts 3 to 5 years. If simply giving you more time to pay back the amount of money you owe can improve your situation, Chapter 13 is convenient. Keep in mind that this caters to individuals with a stable paycheck.

The Pros for Chapter 13

– You will keep your property.

– If you are falling behind on mortgage payments, it will prevent foreclosure.

– Loan cosigners are protected from all collection efforts. 

The Cons for Chapter 13

– It will take longer to eliminate your debt. 

– Your case will be dismissed if you don’t pay on time.

– Unexpected situations such as getting laid off will preclude you from keeping up with the monthly payments.

Which Bankruptcy option is the best? 

Bankruptcy isn’t a process that you can research online and figure out by yourself. One small mistake can result in losing your assets and getting deeper in debt. Most bankruptcy cases fail due to a lack of guidance. 

Our experienced attorneys at The Law Office of Erika Luna can determine which option is right for you as well as protect you from the pitfalls of filing for bankruptcy. 

More To Explore

To our clients and community:

The Law Office of Erika Luna is committed to maintaining our employees’ safety and well-being and helping our clients do the same.


While we are closely monitoring the impact of the Coronavirus on our community, we want you to know that our telephone lines are open, and our staff is available to discuss your current case or to consult you on a potential one. 

We are currently offering a contactless bankruptcy process so people can file from the comfort of their homes. The entire process can be completed online and over phone/zoom calls. Clients can sign all paperwork electronically and attend the 341a hearing by phone. 

To arrange any in-person meetings, please call us for an appointment per the firm’s availability. We are taking substantial precautions to meet and exceed the CDC’s and state government’s guidelines for maximum protection. Please also note that your case, whether current or new, can be entirely managed remotely.

We hope you and your loved ones are safe and healthy during these challenging times. Thank you.

The Law Office of Erika Luna

A nuestros clientes y comunidad:

Nuestra firma está comprometida a mantener la seguridad y el bienestar de nuestros empleados y a ayudar a nuestros clientes a hacer lo mismo.

Mientras estamos monitoreando de cerca el impacto que el Coronavirus está teniendo en nuestra comunidad, queremos que sepa que las líneas telefónicas de nuestra oficina están abiertas y que nuestro personal está disponible para hablar sobre su caso o consultar sobre un caso posible.

Actualmente estamos ofreciendo un proceso de bancarrota sin contacto para que las personas puedan declararse desde la comodidad de sus hogares. Todo el proceso se puede completar en línea y por teléfono / llamadas con zoom. Los clientes pueden firmar todos los documentos electrónicamente y asistir a la audiencia 341a por teléfono.

Llámenos para solicitar una cita según la disponibilidad de la empresa. Estamos tomando precauciones importantes con nuestra oficina para cumplir y superar las recomendaciones de la CDC y del gobierno estatal para la máxima protección. Tenga en cuenta también que su caso, ya sea actual o nuevo, se puede manejar por completo de forma remota.

Esperamos que usted y sus seres queridos estén seguros y saludables durante estos tiempos difíciles. Gracias.

La oficina legal de Erika Luna