Chapter 7 vs. Chapter 13 Bankruptcy in Georgia: How to Decide Which One Fits

For most individuals in Georgia, the bankruptcy decision comes down to two chapters. Chapter 7 discharges most unsecured debt in a few months in exchange for giving up any property that Georgia law does not protect. Chapter 13 keeps everything but requires a three- to five-year repayment plan. Neither is better in the abstract. The right chapter depends on your income, what you own, what you owe, and, most often, what you are trying to keep.

This article compares the two under the law as it stands today, including the July 1, 2026 increase in Georgia’s homestead exemption and the means test income figures currently in effect. Figures that change periodically are noted as such.

The Short Version

How Chapter 7 Works

Chapter 7 is a liquidation. A trustee is appointed to collect any property that is not protected by an exemption, sell it, and distribute the proceeds to creditors. In practice, most Georgia Chapter 7 cases are “no-asset” cases: the debtor’s property fits within the exemptions, nothing is sold, and the trustee files a report stating that there is nothing to administer.

Georgia has opted out of the federal exemption scheme, so Georgia residents use the exemptions in O.C.G.A. § 44-13-100. The ones that matter most in a typical case are the homestead exemption, now $50,000 for an individual and $100,000 for married co-owners for cases filed on or after July 1, 2026; the $5,000 motor vehicle exemption; the $5,000 household goods exemption (with a $300 per-item cap); and the wildcard, which protects $1,200 of any property plus up to $10,000 of any unused homestead exemption. Qualified retirement accounts are generally protected in full.

Eligibility for Chapter 7 turns on the means test. If your household’s average monthly income over the six months before filing, annualized, is at or below the Georgia median for your household size, you pass. For cases filed on or after April 1, 2026, the Georgia medians are $68,478 for one person, $84,965 for two, $101,479 for three, and $123,481 for four, plus $11,100 for each additional person. Income above the median does not disqualify you, but it requires a second calculation of disposable income after allowed expenses.

The timeline is short. The meeting of creditors is usually held about a month after filing, and the discharge typically enters roughly sixty days after that, so most cases are over within three to four months. The discharge eliminates credit card debt, medical bills, personal loans, deficiency balances, and most other unsecured debt. It does not eliminate most tax debt, student loans in most circumstances, child support and alimony, criminal fines and restitution, or debts incurred by fraud.

How Chapter 13 Works

Chapter 13 is a reorganization for individuals with regular income. Instead of liquidating property, you propose a plan to pay creditors from your disposable income over a commitment period of three years if your income is below the Georgia median or five years if it is above. Payments go to the Chapter 13 trustee, who distributes them according to the plan. When the plan is completed, the remaining balance on dischargeable unsecured debt is discharged.

To be eligible, you must have regular income sufficient to fund a plan, and your debts must fall under the limits in 11 U.S.C. § 109(e), currently $526,700 in unsecured debt and $1,580,125 in secured debt for cases filed on or after April 1, 2025. Congress has passed legislation that would replace those two figures with a single $2.75 million limit; as of this writing it awaits the President’s signature, and our article on the Bankruptcy Threshold Adjustment Act tracks its status.

Chapter 13 can do several things Chapter 7 cannot:

• Stop a foreclosure and cure the arrears. Past-due mortgage payments are spread over the life of the plan while you resume regular payments.
• Protect non-exempt property. If you have equity above the exemptions, you keep the property and pay its non-exempt value to unsecured creditors through the plan instead.
• Strip a wholly unsecured junior lien. A second mortgage or HELOC with no equity supporting it can be treated as unsecured and discharged at the end of the plan.
• Reduce certain secured debts to the value of the collateral. A vehicle loan more than 910 days old, or a loan on other personal property more than a year old, can be paid at the collateral’s value rather than the balance owed.
• Pay priority taxes and support arrears over time without further collection activity.
• Protect a co-signer. The co-debtor stay in 11 U.S.C. § 1301 shields a co-signer on consumer debt while the plan is pending.

The trade-off is time and discipline. Plans run three to five years, and a case that falls behind can be dismissed, which returns you to where you started with creditors free to resume collection.

When Chapter 7 Is Usually the Better Fit

• Your income is at or below the Georgia median, or your allowed expenses leave little disposable income.
• Your property fits within the Georgia exemptions, so there is nothing for a trustee to sell.
• Your debt is mostly unsecured: credit cards, medical bills, personal loans, repossession deficiencies, or old judgments.
• You are current on your mortgage and car loan, or you are prepared to surrender the collateral.
• You need relief quickly and do not want to be in a multi-year plan.

When Chapter 13 Is Usually the Better Fit

• You are behind on your mortgage and want to keep the house.
• You have equity in your home or other property above the exemption amounts.
• Your income is above the median and the means test calculation shows meaningful disposable income.
• You owe priority taxes, support arrears, or other debt that will not be discharged in Chapter 7 and want a structured way to pay it.
• You received a Chapter 7 discharge within the last eight years and are not yet eligible for another one.
• You have a co-signer you want to protect, or a second mortgage that no longer has equity behind it.

Costs and Credit Effects

The court filing fee is $338 for Chapter 7 and $313 for Chapter 13. Attorney fees differ in structure more than amount: Chapter 7 fees are generally paid before filing, while most Chapter 13 attorney fees are paid through the plan, which can make Chapter 13 accessible to someone who cannot pay a fee up front. Both chapters require a credit counseling course before filing and a financial management course before discharge.

A Chapter 7 can remain on a credit report for up to ten years from filing and a Chapter 13 for up to seven. In practice, many filers find that their scores recover faster than those dates suggest once the discharged debt stops reporting as delinquent. Our article on how bankruptcy can improve your credit score explains why.

Timing Rules Between Cases

If you received a Chapter 7 discharge, you must wait eight years from that filing date before you can receive another Chapter 7 discharge. You may file a Chapter 13 sooner, but you cannot receive a Chapter 13 discharge if you received a Chapter 7 discharge in a case filed within the previous four years, or a Chapter 13 discharge in a case filed within the previous two years. These rules sometimes make Chapter 13 the only available option for a debtor who needs protection now.

Converting Between Chapters

The choice is not always permanent. A Chapter 13 debtor whose circumstances change can usually convert to Chapter 7 if eligible, and a Chapter 7 debtor can convert to Chapter 13 if, for example, a trustee identifies non-exempt property the debtor wants to keep. Conversion has consequences for timing and for how property is valued, so it should be planned rather than improvised.

Georgia-Specific Considerations

Cases for metro Atlanta residents are filed in the United States Bankruptcy Court for the Northern District of Georgia, which maintains divisions in Atlanta, Gainesville, Newnan, and Rome. The Chapter 13 trustees in the district administer tens of thousands of plans, and local practice on matters such as how mortgage payments are handled inside a plan varies by judge. An attorney who practices in the district regularly will know which approach the assigned judge expects.

Frequently Asked Questions

Can I keep my house in a Georgia Chapter 7?

Usually, if you are current on the mortgage and your equity is within the homestead exemption, which is now $50,000 for a single owner and $100,000 for married co-owners. If you are behind on payments, Chapter 7 does not provide a way to catch up, and the lender can seek relief from the automatic stay to foreclose. Chapter 13 is designed for that situation.

Can I keep my car?

In Chapter 7, up to $5,000 of equity in a vehicle is exempt, and the unused wildcard can protect more. If there is a loan, you will generally need to reaffirm it, redeem the vehicle for its value, or surrender it. In Chapter 13 you keep the vehicle and pay the loan through or outside the plan, sometimes at a reduced amount if the loan is more than 910 days old.

What if my income is above the Georgia median?

You may still qualify for Chapter 7. The second part of the means test deducts allowed living expenses, secured debt payments, taxes, and other items from your income. If the remaining disposable income is below the statutory thresholds, no presumption of abuse arises. If it is above them, Chapter 13 is generally the path.

Does Chapter 13 require me to pay back all of my debt?

No. Secured debts you want to keep and priority debts such as recent taxes and support must be paid in full, but unsecured creditors receive only what your disposable income and non-exempt property require, which in many plans is a small percentage of what is owed.

Which chapter is faster?

Chapter 7. Most cases conclude within three to four months. Chapter 13 plans last three to five years by design.

Talk to an Atlanta Bankruptcy Attorney

The chapter decision is the most consequential one in a consumer bankruptcy, and it depends on facts that are specific to you. Rountree Leitman Klein & Geer’s bankruptcy attorneys have filed and administered thousands of Chapter 7 and Chapter 13 cases in the Northern District of Georgia. Contact our Atlanta office for a consultation, and we will walk through the exemptions, the means test, and your goals to determine which chapter protects what matters most to you.