Essentially all consumer bankruptcy cases filed in the United States are filed under one of two “Chapters” of bankruptcy–Chapter 7 or 13.
Internally, 80% of our cases are chapter 7. A Chapter 7 is almost always the shortest, simplest, and least expensive type of bankruptcy that will eliminate debts through what is called a discharge. It typically takes three to four months, does not require monthly payments, and the attorney fees are usually much less than any other type of bankruptcy. On the other hand, property that has value and is not exempted must be turned over to a trustee, who sells it to pay your creditors. Many people are able to complete a Chapter 7 without turning over any such asset, but an attorney can advise you on whether this is likely for you. This is the type of bankruptcy that most people think of when they consider bankruptcy.
Internally, 19% of our cases are chapter 13. A Chapter 13 will usually last between three and five years and involves making payments to a trustee on a monthly basis, so regular income is required. You typically get to keep all of your property without being concerned that the trustee will take it. Because of the length and increased complexity of the case, the cost of the bankruptcy itself is greater than a Chapter 7, both in attorney fees and in trustee fees, but these fees are usually paid through the monthly payments. Some people file a Chapter 13 because they filed a Chapter 7 that resulted in a discharge within less than eight years. A Chapter 13 also results in a discharge upon completion of the plan payments, and often a person who files a chapter 13 pays less than what they owe.