David M. Siegel answers in 38 seconds. Watch on YouTube · Read the transcript.
Short answer: Chapter 7 is the fresh start — it eliminates credit cards, medical bills and personal loans quickly, usually in about four months. Chapter 13 is a consolidation that repays all or part of your debt over three to five years, and it is what saves a home from foreclosure or a vehicle you have fallen behind on.
Chapter 7: the fresh start
Chapter 7 is for someone with relatively few assets and a lot of unsecured debt. Credit cards, medical bills, personal loans, past-due utilities, repossession and foreclosure deficiencies — these are wiped out, and you get back on your feet fast.
The whole case runs about 110 days from filing to discharge. There is one short meeting with the trustee, held on Zoom, roughly thirty days in. Most people never see the inside of a courtroom.
Chapter 13: the consolidation
Chapter 13 is a court-supervised repayment plan lasting three to five years. You repay all or a portion of what you owe at a monthly payment based on what you can actually afford, and you keep your property throughout.
It is the right chapter in four common situations: you are behind on a mortgage and want to keep the house; you have fallen behind on a vehicle; you carry debt that cannot be discharged, such as recent taxes; or your income minus your expenses shows a monthly surplus.
The surplus test is what usually decides it
The most common reason someone files Chapter 13 instead of Chapter 7 is not choice — it is eligibility. If you earn above the Illinois median for your household size and have disposable income left at the end of the month, Chapter 7 may not be available to you.
That calculation is not a rule of thumb. It runs on your actual income, your actual expenses and your household size, and it is the first thing we work out in a consultation.
Equity is the other deciding factor
Illinois exemptions protect a certain amount of equity in what you own. As of January 1, 2026, the Illinois homestead exemption is $50,000 per owner — $100,000 on a jointly owned home — a substantial increase from the $15,000 that had been in place for years.
If your equity fits inside the exemption, Chapter 7 protects your home. If you have more equity than the exemption covers, Chapter 13 lets you keep everything and repay creditors over time instead of having an asset sold.
Not sure which chapter fits your situation?
The consultation is free and there is no obligation. You will find out
what you qualify for, which debts can be eliminated, what it costs, and what the payment plan looks like.
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Full transcript of the video
Chapter 7 verses Chapter 13 Chapter 7 is known as the Fresh Start that’s when someone who has very little in the way of assets and a lot of debt can eliminate credit cards medical bills and personal loans and get back on their feet fast Chapter 13 on the other hand is a repayment plan a consolidation where the person repays either all or a portion of their debt over a three to five year period more common with someone who’s trying to save a home with equity or a vehicle that they fell behind on or if they have non dischargeable debt or if they have available money per month income minus expenses shows a surplus Chapter 13 is going to be the better option to repay over time
Related questions
- Do I qualify for Chapter 7?
- Will I lose my house if I file?
- Can bankruptcy stop a foreclosure?
- How much does it cost to file?
About the author. David M. Siegel has represented consumer bankruptcy clients in the Northern District of Illinois since 1991 and is the author of several books on consumer bankruptcy. His offices are in Wheeling, South Chicago, Joliet and Westchester.
This article is general information about Illinois and federal bankruptcy law. It is not legal advice, and reading it does not create an attorney-client relationship. Every case turns on its own facts — speak with an attorney about yours.
