Chapter 7 & Chapter 13 Bankruptcy: What Is It, Who It Is For, & What The Pros & Cons Are!

Feb 28, 2023 | Bankruptcy

Bankruptcy is a word most people don’t like hearing due to the negative connotation that has always surrounded it. However, when all other financial solutions have been exhausted and aren’t working, it might be your best and only option. Bankruptcy can help to eliminate debt and can allow you the chance to get back on your feet, rebuild your credit, and have a fresh start. 

Though it’s not all bad, it obviously isn’t all good, either, so charting bankruptcy territory can be challenging. That’s why it’s best to enlist the guidance of a seasoned bankruptcy lawyer and avoid having to do it alone. At Green Legal Group, our bankruptcy attorneys have extensive knowledge of both Chapter 7 and Chapter 13 bankruptcy laws and frequently help clients find peace of mind and regain financial freedom. We understand everything that you need to know before filing! Before you decide if bankruptcy is for you, it is important to weigh both the pros and cons of Chapter 7 and Chapter 13 bankruptcy. Here are some bankruptcy basics to get you started! 

What Is Chapter 7 Bankruptcy & Who Is It For?

Chapter 7 bankruptcy is also known as “liquidation bankruptcy.” It’s a way to have your unsecured debt like credit cards, medical bills, and personal loans discharged by a bankruptcy court. It is one of the most common types of bankruptcy, and it is typically a quick process. It is the only type of bankruptcy that can completely get rid of all debts without requiring you to pay them back. This is why it’s best used as a safety net for individuals and small businesses. While there are several pros, there are also cons that anyone considering Chapter 7 bankruptcy should be aware of before deciding if it’s right for them. 


  • The biggest and most obvious pro is that the majority of your debt gets discharged, allowing you or your business to get a clean slate. Dischargeable debts include credit card balances, medical bills, mortgage or vehicle loans, utility bills, HOA fees, and more. 
  • When you file for Chapter 7 bankruptcy, the court issues an “automatic stay order,” which immediately stops any lawsuits against you, and collection agencies from harassing you and repossessing your car or other possessions. 
  • There are no limits on the amount of debt you can have when filing for Chapter 7, like there are with Chapter 13. 
  • The average Chapter 7 bankruptcy case is relatively fast, taking about 4-6 months to complete. 
  • You get to keep the income you earn and the assets you buy after filing for Chapter 7 bankruptcy. 


  • Chapter 7 bankruptcy can take up to 10 years to come off of your credit report.
  • It can be expensive, when considering the cost of the application fee ($338) and attorney fees.
  • Because of the hit to your credit, it’ll be harder for you to borrow money again. According to Rocket Mortgage, you’ll have to wait 4 years after the court dismisses your bankruptcy to qualify for a conventional loan (though there are other types of loans that may be available to you). 
  • The process of filing for bankruptcy can be embarrassing, and public. You’ll have to appear in court at least once. 

What Is Chapter 13 Bankruptcy & Who Is It For?

Chapter 13 bankruptcy, also known as a, “wage earners plan,” is meant to enable individuals with regular income to develop a way to pay back some or all of their debts. The timespan of the payment plan is typically 3-5 years. There are certain guidelines for exactly how long a debtor will have to repay their debts, but legally, the time-frame cannot exceed the 5 year mark. This is also a common form of bankruptcy. If you are behind on mortgage, car, or utility payments, this might be a good option for you. 


  • Like Chapter 7, filing for Chapter 13 bankruptcy immediately puts a halt to possible lawsuits, and collection agencies from harassing you. 
  • Chapter 13 bankruptcy can offer flexibility that other types of bankruptcy don’t allow you to have by allowing you to stretch and lessen your recurring payments or give something up to avoid paying back the debt. 
  • You can keep all your property after filing, though you have to keep up with your payments to do so. This applies to homes, cars, and more. 
  • You can file for Chapter 13 bankruptcy again after two years (though hopefully, you won’t have to). This is the shortest required wait period for any type of bankruptcy. 


  • Your debts have to be paid from your disposable income. Disposable income is what is left over after you’ve purchased your necessities like food, water, shelter, etc. This is a harsh reality for many to deal with as the leftover money that might typically be used for leisure activity is immediately tied up in a payment plan. 
  • Chapter 13 bankruptcy can take about 7 years to come off of your credit report. 
  • Because of the damage to your credit, it’ll be difficult to obtain a personal loan after filing. If you do receive one, it is likely you’ll have a high interest rate. 

What Green Legal Group Can Do For You

At Green Legal Group, we know how daunting the bankruptcy processes can seem. Despite some of the cons involved in both Chapter 7 and Chapter 13 bankruptcy processes, our lawyers have extensive knowledge of Utah’s bankruptcy laws and can help guide you through the proceedings to the best possible outcome! It’s important to work with a bankruptcy attorney who is familiar with the steps of each case and can prevent mistakes that can cost you later on. If you’re looking for a way to eliminate your debts and create a fresh financial start for yourself and your loved ones, we can get you there. Let us use our 15 years of legal experience to bring you peace of mind. Call today for a free 30-minute consultation!

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