The biggest difference between Chapter 7 and Chapter 13 is that Chapter 13 allows you to catch up on secured debts like your home or your car while also discharging unsecured debt. 

Chapter 7 looks at the assets you own at the moment your case is filed, protects those assets which are “exempt”— generally everything you own—and discharges most or all of your debts.

Chapter 13 also looks at your financial life as of when your case is filed but focuses more on a repayment plan to deal with any secured debt (house, car etc) that you are behind on while also discharging most or all of your unsecured debts.  IMPORTANT NOTE: You may NOT be required to pay credit card, personal loans, payday loans, medical debt, vehicle deficiency, “broken” lease or other unsecured debt in a Chapter 13.  It is a myth that you have to pay back all of your debt in a Chapter 13!  What you pay in a Chapter 13 is largely dependent on your individual finances and non-exempt assets.

If you are behind on your rent and believe you may be facing eviction, bankruptcy could help you, For example:

• If you want to stay in the rental, but need time to catch up on payments, you may want to consider filing a Chapter 13 bankruptcy petition. In a Chapter 13, you make monthly payments that are tailored to your budget, allowing you time to catch up while also providing you with the protection from eviction.
• If you want to move out of the rental, a Chapter 7 may be better suited for you. In a Chapter 7, there is no monthly payment (as in a Chapter 13). You can “reject” your rental lease, and the back rent is forgiven (“discharged”).

Chapter 7 is more appropriate for simple cases while Chapter 13 is used for more complicated bankruptcies. Chapter 13 can give you more power over and flexibility with certain kinds of creditors, and if you have non-exempt assets, you would likely be able to keep those assets in a Chapter 13. However, if you do not have those types of debt or assets, and you are income eligible, then Chapter 7 would likely be the faster and easier option.

 Please note that prior bankruptcy filings also play a part in what Chapter you can file.   For example, if you filed a prior Chapter 7 and received a discharge, and it was over 4-years ago, but less than 8-years ago, you would be able to file a Chapter 13 and get a discharge.  However, you would have to wait 8-years from the prior Chapter 7 filing (if you received a discharge) to file another Chapter 7.  Also, if it less than 4-years from when you filed that prior Chapter 7, you could still file a Chapter 13 to get the automatic stay, but you would not be eligible for a discharge.