In the Eastern District of Louisiana, half of the cases filed are Chapter 7s and half are Chapter 13s. Whether you file a Chapter 7 or a Chapter 13 case will depend on your goals for the bankruptcy and whether the law allows you to file a Chapter 7. Under the Bankruptcy Reform Act of 2005, Congress felt that too many debtors who had the means to pay their creditors were taking advantage of the Chapter 7 liquidation. Under the current law there are income limitations, the “Means Test”, which force certain higher income families to file a Chapter 13, when they would rather file a Chapter 7 bankruptcy.
I generally recommend looking at a Chapter 7 first. A Chapter 7 is cheaper, faster and imposes less restrictions on the debtors. A typical Chapter 7 will be over in four to five months, whereas a Chapter 13 lasts from 36 to 60 months. During that time the Chapter 13 debtors will not be able to use credit cards, will have to turn over each year’s income tax rebates and to make payments each month to the bankruptcy trustee.