First of all, Chapter 7 is a much shorter process. In no-asset cases, the Chapter 7 debtor can receive a discharge in 4 months from the date of the bankruptcy petition filing. Chapter 13 bankruptcy cases last 3 to 5 years.

Another meaningful advantage is that in Chapter 7 cases, there is no pay back on most unsecured claims (credit cards, medical bills, personal loans, etc.). Most of the unsecured debts are completely eliminated. Chapter 13 debtors, however, are required to pay back a portion of the unsecured debts over the 3-5 year period.

Chapter 7 debtors can receive an immediate discharge without paying creditors any of the debtor’s future income. There are a few exceptions. See Property of the Estate.  In Chapter 13, however, the debtor will not receive a discharge until the debtor devotes all of the debtor’s projected disposable income for 3-5 years.

Chapter 7 debtors may be able to eliminate their debts while keeping some of their non-exempt assets. In Chapter 13 cases, to keep non-exempt assets debtors have to pay off the value of non-exempt assets to creditors through the 3-5 year plan.

Also, Chapter 7 offers savings with respect to attorney fees. A Chapter 7 could cost $2,500 in attorney fees and costs, whereas legal fees for a Chapter 13 bankruptcy go up to $4,000 and up. 

Finally, Chapter 7 debtors may be able to repair their credit faster than Chapter 13 debtor. 

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