Chapter 7 vs Chapter 13: What the Data Shows
A statistical analysis of America's two most common bankruptcy chapters — and what drives filers to choose each path.
Disclaimer: This guide provides statistical information only. It is not legal advice. Consult a bankruptcy attorney before making any decisions about filing.
60%
Chapter 7
of all filings FY2024
37%
Chapter 13
of all filings FY2024
The Core Difference
Chapter 7 is a liquidation — a trustee collects and sells non-exempt assets, pays creditors what little they can, and the court discharges most remaining debts. Most Chapter 7 cases are "no-asset" cases where filers have nothing worth liquidating. The process typically takes 4–6 months.
Chapter 13 is a reorganization — filers keep all their assets but commit to a 3–5 year repayment plan supervised by a trustee. At the end, remaining eligible debts are discharged. It costs more in attorney fees and takes much longer, but it's the only path that can save a home from foreclosure or let filers keep non-exempt assets.
Who Files Which Chapter?
The data reveals consistent patterns across states and years:
- Chapter 7 filers typically have income below their state's median, few valuable assets, and primarily unsecured debt (credit cards, medical bills). The means test serves as an automatic screener.
- Chapter 13 filers often have regular income, face foreclosure, have non-exempt assets to protect, or earn too much to qualify for Chapter 7.
Geographic Patterns in the Data
States in the Southeast — Tennessee, Alabama, Georgia, Mississippi — consistently show much higher Chapter 13 rates relative to Chapter 7. This reflects regional legal culture, attorney preferences, and the higher rates of homeownership and secured debt in these states. In contrast, Western states like Nevada, Arizona, and California lean heavily Chapter 7.
Trend: Chapter 13 Recovering Post-COVID
During the pandemic, Chapter 13 filings collapsed more sharply than Chapter 7. The reasons: Chapter 13 requires regular income (disrupted by job losses) and in-person court proceedings (suspended during lockdowns). As of FY2024, Chapter 13's share is recovering but still below pre-pandemic levels.
The Means Test Gate
Since 2005's Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), the means test largely determines which chapter a filer can access. If income exceeds the state median and disposable income is sufficient, the filer must generally use Chapter 13. This reform shifted many filers who would have used Chapter 7 into Chapter 13 — but it also reduced overall filings as some found neither chapter accessible.
Which Is Better?
There is no universal answer — it depends on your specific situation. The data cannot tell you which chapter is right for you. What the data shows is that most Americans who file choose Chapter 7, suggesting that most filers qualify, have limited assets, and prioritize a fast discharge over debt repayment.
A worked example
Consider a household earning $75,000 per year facing an annual cost of $18,000 for the service this guide covers. Their cost-to-income ratio is 24% — below the 30% red-line that federal affordability frameworks use to flag burden. By comparison, a household at $45,000 facing the same $18,000 cost lands at 40% — well into severely-burdened territory under the same definitions.
Where to dig deeper
The methodology page documents exactly which federal series we draw from, how we weight regional differences, and the reference period for each metric. The research section publishes original analyses derived from the same underlying database — useful when you want to see year-over-year shifts or peer-jurisdiction comparisons that the per-page detail views don't surface.
| Threshold | Federal definition | Practical meaning |
|---|---|---|
| Below 7% | Affordable | Comfortable margin for unexpected expenses |
| 7-30% | Moderate burden | Manageable but constrains discretionary spending |
| Above 30% | Burdened | HUD definition — qualifies for federal subsidy programs |
| Above 50% | Severely burdened | Trade-offs with food, healthcare, savings |
"The strongest decisions come from triangulating multiple data sources against your specific situation, not from chasing the latest headline number."
Frequently asked questions
Where does this data come from?
All figures on this page derive from official federal data — primarily the U.S. Bureau of Labor Statistics, U.S. Census Bureau, U.S. Department of Health and Human Services, and U.S. Department of Labor. We cite the underlying agency and series in the methodology section. No proprietary aggregators are used.
How often are figures updated?
Each series follows its own publication cadence. We refresh our database within 30 days of each upstream release. Specific update timestamps appear in the page footer where available; the methodology page documents the cadence per data series.
Can I use this data for my own analysis?
Yes. The underlying federal data is public domain. Our presentation, calculations, and editorial commentary are licensed for individual reference. For commercial republication or large-scale data extraction, contact us at the email listed on the contact page.
What if the figures here disagree with another source?
Different sources use different methodologies, definitions, geographic boundaries, and reference periods — disagreement is normal and informative. Our methodology page documents exactly which series and reference period we use for each metric, so you can reproduce or audit the figures against the upstream agency directly.