Most individuals who file for bankruptcy in the United States qualify for either a Chapter 7 or Chapter 13 filing. Your income level determines which type of bankruptcy is right for your situation. 

Explore the differences between these processes as you consider your debt relief options. 

Eligibility requirements 

Individuals who want to file for Chapter 7 bankruptcy must pass the means test established by federal law. This test looks at your household size and your income to determine whether you fall under the financial threshold. Those who do not pass the means tests because they earn too much money must file for Chapter 13. However, you cannot pursue a Chapter 13 filing if you have more than 

Discharge or reorganization of debt 

With a Chapter 7 bankruptcy, the bankruptcy court will discharge eligible debts. These include medical bills, some tax debts, credit card debts and other unsecured debts. However, if you do not fall under the income limit for a Chapter 7 filing, you must reorganize your debt with a Chapter 13 filing. With this process, the trustee assigned to your case will review your assets and debts to determine how much you can afford to repay. He or she will make a repayment plan you must follow for three to five years, after which you will receive a discharge for the remaining amount. 

Time commitment 

If you meet the requirements for Chapter 7 bankruptcy, you can complete the process and receive a discharge within about three to five months. With Chapter 13 bankruptcy, your filing is not complete until you meet the terms of the repayment plan, within five years or less depending on your financial circumstances. 

Asset treatment 

Both types of bankruptcy allow the individual to keep exempt assets, including a car, vehicle and personal items up to a certain value. Chapter 7 requires the person to sell nonexempt assets to repay a portion of debt. Chapter 13 filers can keep nonexempt assets but must pay debtors the equivalent of its value.