When debt becomes overwhelming, many Virginians reach a single, pivotal question: Should I file Chapter 7 or Chapter 13? The answer is rarely obvious. Both chapters are designed to help honest but unfortunate debtors, yet they operate very differently and serve different financial realities. Choosing the wrong chapter can lead to unnecessary stress, higher costs, or missed protections. This guide explains the differences in clear terms, grounded in Virginia practice, to help readers understand how the law actually works, not how it is often described online.
Bankruptcy law is federal, codified in Title 11 of the United States Code, but it is applied locally through bankruptcy courts throughout Virginia.
Chapter 7: Liquidation With a Fresh Start
Chapter 7 is governed primarily by 11 U.S.C. §§ 701-784. For individuals, its purpose is to discharge personal liability for debts such as credit cards and medical bills without requiring repayment (other than, in rare cases, from liquidation of nonexempt assets).
For most Virginia filers:
Chapter 13: Reorganization With Structure
Chapter 13 is governed by 11 U.S.C. §§ 1301-1330. Individuals receive a discharge after completing a court-approved repayment plan lasting 36-60 months.
Chapter 13 is often used to:
Chapter 7 Eligibility
For individuals with primarily consumer debt, relief in the form of a Chapter 7 discharge is most readily available to individuals whose household income is less than the Virginia median income for a household of that size, published by the U.S. Trustee Program and updated periodically. Individuals whose household income exceeds the median may still seek relief under Chapter 7. Such individuals, however, undergo a more thorough evaluation, including a comparison of income and expenses under the Means Test of 11 U.S.C. § 707(b)(2).
For individuals with primarily nonconsumer debts, the median income considerations and the Means Test do not apply, which makes it easier for those individuals to proceed in chapter 7.
Chapter 13 Eligibility
Chapter 13 is available only to individuals with:
Many Virginians who do not qualify for Chapter 7 still find meaningful relief through Chapter 13.
Bankruptcy does not rely on voluntary cooperation from creditors.
A common fear is asset loss. In practice, most Virginia filers keep all their property.
Virginia Exemptions
Virginia has opted out of the federal exemption scheme (11 U.S.C. § 522(b)), meaning most filers who meet the residency requirements use Virginia exemptions, including:
As of statutory updates effective in 2020, homestead deeds are no longer required for claiming exemptions in bankruptcy.
| Feature | Chapter 7 | Chapter 13 |
| Duration | ~4-5 months | 3-5 years |
| Attorney’s Fees | Lower | Higher, usually paid through plan |
| Stops Foreclosure | Yes (temporarily) | Yes (with long-term structure) |
| Asset Protection | Via exemptions | Broader protection |
| Credit Report | 10 years | 7 years |
Scenario 1: The Chapter 7 Reset
A Roanoke household earns $62,000 annually and carries $55,000 in medical and credit-card debt. Utilizing Virginia exemptions, they can protect all their assets from liquidation by the Chapter 7 trustee. Since the household income is below the median income and their assets are protected from liquidation, Chapter 7 is an excellent option to receive a quick and easy discharge.
Why Chapter 13 would not be better: A repayment plan, committing disposable income over the course of 3-5 years, is an unnecessary alternative when a discharge under Chapter 7 is readily available to this household.
Scenario 2: The Chapter 13 Shield
A Harrisonburg homeowner falls three months behind on a mortgage after an illness. Foreclosure proceedings have begun. Chapter 13 allows arrears to be repaid over 36-60 months under 11 U.S.C. § 1322(b)(5), while stopping foreclosure immediately upon filing via the automatic stay (11 U.S.C. § 362).
Why Chapter 7 would fall short: Chapter 7 cannot force a lender to accept cure of arrears over time.
A Charlottesville family earns above the Virginia median but faces high nondiscretionary expenses supporting an elderly parent. They could manage their expenses based on their current income, if only they did not have excessive credit card debt that never seems to decrease due to high interest rates. Given their above-median income, Chapter 7 relief is uncertain. Chapter 13 provides predictable payments while protecting assets and allowing continued family support.
Several principles consistently guide the decision:
This article simplifies complex legal standards. Outcomes depend on:
Readers should treat this guide as educational, not a substitute for legal advice.
Chapter 7 and Chapter 13 are not competing moral choices; they are different legal tools designed for different problems. For many Virginians, that decision becomes clear only after a careful review of income, assets, and long-term goals.
If you are unsure which chapter fits your situation, a consultation with a bankruptcy attorney can provide clarity that online calculators and generalized advice cannot. At Chaplain Dufraine, clients speak directly with an attorney to understand their options and choose a path forward with confidence.
