Chapter 7 or Chapter 13: Which Form Of Bankruptcy Is Right For You?
Whether you file for Chapter 7 or Chapter 13 bankruptcy, having an excellent legal advocate on your side is crucial. At Machi & Associates, P.C., our Arlington, TX bankruptcy lawyers have decades of experience guiding North Texans through financial turbulence and toward lasting relief. But which type of bankruptcy should you choose—and what do you need to know before talking to an attorney? The right chapter depends on several factors, including your debt type, income, assets, and long-term financial goals.
Understanding Bankruptcy in Arlington, Texas
Bankruptcy is a federal legal process designed to help honest people or families who can't afford to pay overwhelming debts. In Arlington, as in the rest of Texas, most individual filers choose between two main consumer bankruptcy options: Chapter 7 liquidation bankruptcy and Chapter 13 reorganization bankruptcy.
Navigating these choices can be complex, which is why Machi & Associates, P.C. works closely with clients to explain every detail, protect critical assets, and ensure you select the best path forward for your unique circumstances.
Chapter 7 Bankruptcy in Arlington, Texas: Liquidation & Getting a Fresh Start
Chapter 7 bankruptcy is often called "liquidation bankruptcy" because it allows individuals to erase most unsecured debts—including credit cards, medical bills, personal loans, and payday loans.
Key features:
- Fast process: Typically completed in three to six months.
- Means Test: You must pass a means test, which compares your income to the Texas median for your household size. For 2025, a single person’s threshold is around $46,709/year. If your six-month average income is below this amount, you likely qualify.
- Discharge of Unsecured Debts: Most debts like credit cards, old utility bills, medical expenses, and some lawsuit judgments are erased entirely.
- Property Exemptions: Texas exemption laws are among the most generous in the U.S. In most cases, you can keep your primary home, a car, personal belongings, clothing, and retirement accounts. Machi & Associates, P.C. will help you maximize exemptions and protect your family’s future.
- Nonexempt property: Some assets (like extra vehicles or vacation property) may be subject to liquidation. In practice, most filers lose little to nothing.
- Automatic Stay: When you file, the court immediately stops creditor harassment, collections, wage garnishment, and most lawsuits.
- Start Over: After discharge, you get a true financial fresh start—with no obligation to repay wiped-out debts, allowing you to rebuild responsibly.
Who should consider Chapter 7?
- Arlington residents with mostly unsecured debt.
- Individuals and families whose income is below the Texas median, or who can pass the means test.
- People with limited valuable assets or whose property is protected by Texas law.
- Those facing relentless creditor harassment, threats of lawsuits or wage garnishment, or who need quick relief.
- Individuals who do not have significant nondischargeable debts like recent taxes, student loans, or child support.
How Machi & Associates, P.C. helps:
Our seasoned Arlington bankruptcy attorneys perform a complete financial analysis, review all assets and debts, and guide you at each step. We handle all filings, defend you in meetings with trustees, and fight for the fullest exemptions. We have years of experience with the U.S. Bankruptcy Court for the Northern District of Texas and will make your transition as smooth as possible.
Chapter 13 Bankruptcy in Arlington, Texas: Restructuring & Keeping What Matters
Chapter 13 bankruptcy is often called “reorganization” or “wage earner’s plan.” Instead of quickly erasing debt, you enter a three- to five-year court-supervised repayment plan. You propose how you’ll pay all or part of your debts—with any unpaid balances at the plan’s end often discharged.
Key features:
- Keep Your Property: You retain your home, car, and other belongings—even if you are behind on payments. Chapter 13 stops foreclosure and repossession in their tracks.
- Repayment Plan: You make monthly payments, based on your disposable income, to a bankruptcy trustee. The trustee distributes payments to creditors, first to priority debts (taxes, child/spousal support) and secured debts (mortgages, car loans), then to unsecured creditors.
- Length: 3–5 years, depending on your income and proposal.
- Lower Interest/Balance: Sometimes, principal balances or interest rates on car loans or certain debts can be reduced.
- Catch Up on Missed Payments: You can pay off arrears on your mortgage or auto loan over your repayment plan and keep your assets.
- Comprehensive Protection: The automatic stay applies throughout your case, shielding you from lawsuits, creditor contact, foreclosure, and wage garnishment.
Who should consider Chapter 13?
- Arlington homeowners facing foreclosure—but who have income to catch up over time.
- Those who do not qualify for Chapter 7 due to higher income or the means test.
- Filers with significant equity in their home, car, or other non-exempt property they want to keep.
- Those with non-dischargeable debts (recent tax debts, child support arrears) who want time and protection to pay.
- People with co-signers on debts who want to protect them from collections.
How Machi & Associates, P.C. helps:
We design affordable, realistic repayment plans that the courts will approve, prioritizing protecting your assets and your family’s financial stability. Our attorneys negotiate with creditors and the trustee, defend your interests in hearings, and provide ongoing support throughout the repayment period.
Key Differences Between Chapter 7 and Chapter 13 Bankruptcy
| Feature | Chapter 7 Bankruptcy | Chapter 13 Bankruptcy |
|---|---|---|
| Type | Liquidation | Reorganization |
| Best for | Low income, few assets, mostly unsecured debts | Steady income, want to keep home/valuable assets, need to catch up on payments |
| Process Length | 3–6 months | 3–5 years |
| Payment Plan? | No | Yes (monthly payments) |
| Risk to Home & Car | If current, usually safe; nonexempt assets at risk | No risk if you complete the plan and pay arrears |
| Credit Report Impact | Stays 10 years | Stays 7 years |
| Who qualifies? | Must pass means test (Texans below median income/out of disposable income) | Must show enough income for plan |
| Stops Foreclosure? | Temporarily | Yes, offers chance to catch-up |
No matter which path you’re considering, Machi & Associates, P.C. can help you understand every step, maximize your debt relief, and shield you from unexpected consequences.
How Bankruptcy Affects Your Credit & Financial Future in Arlington, TX
Many clients are concerned about bankruptcy’s impact on their credit report and future borrowing. Both Chapter 7 and Chapter 13 will cause your score to drop, especially if your score was previously high. However, bankruptcy immediately wipes out much of the unsecured debt dragging down your score, and you can begin rebuilding right away—sometimes qualifying for new credit sooner than you expect.
- Chapter 7 stays on your credit report for 10 years from the filing date; Chapter 13 remains for 7 years from filing.
- With a clean slate, on-time payments and responsible credit use can improve your score over time.
- Many clients with high income/potential recover more rapidly than they expect.
Machi & Associates, P.C. offers guidance on credit rebuilding and strategizing for lasting financial wellness.
Making the Right Bankruptcy Choice in Arlington, Texas
No two financial situations are alike. The right bankruptcy solution for you depends on your unique mix of income, debts, assets, and goals for the future. At Machi & Associates, P.C., we listen carefully, answer every question, and comb through your finances to develop the best long-term strategy.
- Chapter 7 may be right for you if your income is low, you have minimal assets, and your goal is complete discharge and quick relief.
- Chapter 13 makes sense when you want to keep your home, have valuable property, or need time to catch up on payments.
- Our team educates you about Texas exemptions, local court procedures, creditor negotiations, and life after bankruptcy—so you can make the most informed decision possible.
Why Choose Machi & Associates, P.C. for Bankruptcy in Arlington, TX?
- Over 30 years of combined bankruptcy law experience in Arlington and greater North Texas
- Thousands of cases successfully managed through the Northern District of Texas federal courts
- Proven strategies to protect your assets, stop harassment, and maximize your financial recovery
- Client-centered communication, compassion, and follow-through every step of the way
Take control of your financial future—contact Machi & Associates, P.C. for a free consultation with an experienced Arlington, Texas bankruptcy lawyer who will help you determine whether Chapter 7 or Chapter 13 is the best option for your unique circumstances, and who will fight for the strongest financial outcome possible.
