If you’re struggling with debt and considering bankruptcy in Oklahoma, one of the most important decisions you’ll make is whether to file Chapter 7 or Chapter 13 bankruptcy. Both forms of bankruptcy can help you eliminate debt, but they work very differently and are suited to different financial situations.

This article explains the key differences between Chapter 7 and Chapter 13 bankruptcy, how to decide which one is right for you, and what factors the court considers.

What Is Chapter 7 Bankruptcy?

Chapter 7 is also known as “liquidation” or fresh start bankruptcy. It allows eligible individuals to wipe out most unsecured debts—such as credit cards, medical bills, and payday loans—without making payments to creditors.

Common Benefits Of A Chapter 7:

• Fast process (usually 90 to 120 days)
• No repayment plan
• You can keep both your house and car, but they must be current at the time we file.
• Cheap easy and comprehensive
• Immediate relief from creditor calls and lawsuits
• Most unsecured debts discharged
• It can help you rebuild your credit if you do the right things

Downsides You Might Experience:

• You must pass a means test to qualify
• You could lose non-exempt assets
• Stays on your credit report for up to 10 years
• Not available to businesses or high-income earners

What Is Chapter 13 Bankruptcy?

Chapter 13 is also called a “wage earner’s plan.” It allows you to reorganize your debts into a 3- to 5-year repayment plan based on your income, expenses, and debts. You make monthly payments to a court-appointed trustee, and remaining eligible debts are discharged after the plan is completed.

Common Benefits of Chapter 13:

• Keep all your property, including your home and vehicles
• Catch up on past-due mortgage or car payments
• May reduce or eliminate certain unsecured debts
• Available even if your income is too high for Chapter 7

Potential Downsides of Chapter 13:

• Long commitment (3 to 5 years of monthly payments)
• Court supervision of your finances
• Missed payments can result in dismissal
• Stays on your credit report for up to 7 years

How Do I Decide Which One Is Right for Me?

Here are the key factors to help determine whether Chapter 7 or Chapter 13 is the better choice for your situation:

1. Your Income Matters

• Low or no income: Chapter 7 is more likely
• Regular, steady income: Chapter 13 may be required

You’ll need to complete the means test to see if you qualify for Chapter 7.

2. Your Assets Matter

• Few or no valuable assets: Chapter 7 is usually safe
• Home equity or non-exempt property: Chapter 13 may protect your property in the event you are behind on your payments

Oklahoma has generous bankruptcy exemptions, but some assets may still be at risk in Chapter 7.

3. Type of Debt

• Credit cards, medical bills, and payday loans: Dischargeable in Chapter 7
• Tax debt, child support, or mortgage arrears: Often better handled in Chapter 13

Chapter 13 is helpful if you need time to catch up on secured debts.

4. Are You Facing Foreclosure or Repossession?

• Chapter 13 stops foreclosure and lets you catch up on missed payments over time.
• Chapter 7 may only delay foreclosure and won’t help you save your home unless you’re current on payments.

5. Have You Filed Bankruptcy Before?

• Chapter 7 can only be filed once every 8 years
• The important date is the date you filed not the date the debt is discharged
• Chapter 13 can be filed more frequently, depending on past filings

Which Option Will Help You Long-Term?

The right choice depends not just on getting relief now—but on what will help you rebuild your financial life moving forward.

• Chapter 7 is faster and suited to people with limited income and few assets.
• Chapter 13 is for those who need a structured plan to catch up on secured debt while protecting valuable property.

Talk to a Bankruptcy Attorney Before You File

At Kania Law Office – Tahlequah Lawyers, we help individuals and families across Cherokee County, Oklahoma, file bankruptcy and get a fresh financial start. Whether you are considering Chapter 7 or Chapter 13 bankruptcy, our attorneys are here to see you through the complex maze. For a free consultation with a Tahlequah bankruptcy lawyer, call us at 539-867-2321 or follow this link to ask a free legal question.