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How do I determine whether to file for bankruptcy under Chapter 7, or Chapter 13?

Seattle, WA |

I have 3 credit cards, one line of credit, and doctor bills totaling $20,000. I do not own a home, or have any assets other than my 15 year old car. I have student loans of $40,000, that I realize are not dischargeable under bankruptcy. My net income per month is approximately $3,000. I have decided to file bankruptcy, and am just trying to figure out which Chapter to file under. I know I meet the means test for Chapter 7. Any "advantages" to using Chapter 13 instead?

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Attorney answers 6


Generally, Chapter 13 is used to protect assets - like a house mortgage in arrears or a car loan you are behind on. If you can file a Chapter 7, most people would prefer to do that. It isn't always the best choice though.

For example, if you are having a hard time with your student loans, or if you owe any non-dischargeable taxes, Chapter 13 may be a better choice. In order to give you good advice, you would have to share much more information than this forum allows. If it is possible, you should consult with an experienced attorney in your area. Most attorneys provide a free initial consultation. Take advantage of that.

I hope this helps.
Steven A. Leahy

Please note that the above is not intended as legal advice, it is for educational purposes only. No attorney-client relationship is created or is intended to be created hereby. You should contact a local attorney to discuss and to obtain legal advice.


I agree with Mr. Leahy. Given the facts you present, chapter 7 looks to be the better alternative. Consult with an attorney near you to see what is best.


Although you appear to qualify for a chapter 7 you may want to consider
filing chapter 13 if the student loans are a problem. Feel free to call me to discuss - (425) 775-9700. Larry Blue


Generally speaking, where you will most likely pass the means test based solely on the info in your posting, chapter 7 is preferable in that it will be over more quickly, not requiring plan payments for three to five years. Again, generally speaking, in that you do not have a mortgage or car payment arrearage, a chapter 13 likely holds no obvious benefit in your scenario.


The decision whether to file Chapter 7 or 13 is usually made by letting the numbers do the talking. If you have money left over in your budget after paying student loans, secured debts, and living expenses, you have to go with Chapter 13. Otherwise, you are a Chapter 7.

You are stating no reason why you might be better off with a Chapter 13, but if there is missing information, the analysis will be off.

BTW, in most districts, your student loan wouldn't be paid 1st in a Chapter 13 unless you had no other debts. You could consider a Chapter 20, and for info on that I would suggest contacting a local bankruptcy attorney.

Hope this perspective helps!


I suggest you sit down with an experienced bankruptcy attorney and go over your situation completely in order to decide what type of case is best. Many bankruptcy attorneys like myself do not charge for initial consultations.