Chapter 7 vs Chapter 13: What the Data Shows

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 single filer in a state where the median household income for one person is about $60,000. If they earn $48,000 a year, they fall below the median and pass the means test automatically, Chapter 7 is on the table, and they could discharge most unsecured debt in roughly four to six months. A second filer earning $85,000 in the same state is over the median, so they face the second-stage disposable-income calculation; if too much income is left after allowed expenses, they are steered into a 3–5 year Chapter 13 repayment plan instead. Same debts, different chapter, driven almost entirely by income relative to the state median.

Where to dig deeper

Check your own income against your state's median with the Chapter 7 eligibility estimator, compare filing rates across states on the Chapter 13 rankings, or read the methodology for exactly how the AOUSC filing series is sourced and compiled.

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.

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Every figure on PlainBankruptcy is rendered directly from federal court source data, no number is typed in by an editor. This page draws directly on federal court source data, no figure is typed in by an editor. See our editorial standards & corrections policy, the methodology behind these numbers, or report a data error.