Chapter 7 vs Chapter 13 Bankruptcy in Alaska: Which Fits

Two chapters, two promises. Chapter 7 is liquidation: a trustee may sell property that is not exempt, and most remaining unsecured debt is discharged within months. Chapter 13 is reorganisation: you keep your property and pay what you can afford over three or five years. Both are filed in Anchorage.

Alaska changes the arithmetic. Bankruptcy is federal, but what you keep is decided largely by state law, and Alaska's rules are unusual: a homestead exemption larger than the federal one but not doubled for couples, a real choice between the state and federal systems, fishing permits exempt without limit, and a dividend statute protecting only twenty percent.

This article is general information, not legal advice, and creates no attorney-client relationship. Bankruptcy carries real tax consequences, so a certified public accountant should be part of the conversation. Most dollar thresholds adjust every three years under 11 U.S.C. § 104; the current set applies to cases filed on or after 1 April 2025 (90 Fed. Reg. 8941). BFQ Law Alaska's bankruptcy department is chaired by Elisha Ononye.

Table of Contents

• ➤ The Short Answer: Which Chapter Fits Which Situation
• ➤ Chapter 7 in Outline: Liquidation, Timeline, and What You Keep
• ➤ Chapter 13 in Outline: The Plan, the Timeline, and What It Protects
• ➤ The Means Test Under Section 707(b) and How Alaska's Income Figures Work
• ➤ Alaska Exemptions: What You Keep, and Why the Opt-Out Question Matters
• ➤ The Permanent Fund Dividend in Bankruptcy
• ➤ The Automatic Stay and What It Does Not Stop
• ➤ Debts That Survive Either Chapter
• ➤ When Chapter 13 Is the Only Option
• ➤ When Chapter 7 Is Clearly Better
• ➤ Filing in the District of Alaska: Process and What to Expect
• ➤ Irregular and Seasonal Income
• ➤ Frequently Asked Questions
• ➤ Talk to a BFQ Law Alaska Bankruptcy Attorney

The Short Answer: Which Chapter Fits Which Situation

Chapter 7 fits when your income is modest, your debts are mostly unsecured, and your property fits the exemptions. It ends in a discharge under 11 U.S.C. § 727 without paying creditors. Chapter 13 fits when you need to force something over time: curing mortgage arrears, protecting equity, shielding a co-signer, or filing again too soon for Chapter 7. It needs regular income and a plan confirmable under 11 U.S.C. § 1325.

Question	Chapter 7	Chapter 13
What it is	Liquidation — trustee may sell non-exempt property	Reorganisation — you keep property, pay a plan
Do you pay creditors?	Usually nothing	Monthly, for 3 or 5 years
Time to discharge	60–90 days after the first set creditors-meeting date	On completion of the plan (36–60 months)
Income test	Means test, § 707(b)	No means-test bar; needs regular income
Debt ceiling	None	Unsecured under $526,700 and secured under $1,580,125
Mortgage arrears	Cannot be cured	Cured over the plan
Co-signer protected?	No	Yes, consumer debts, § 1301
Discharge statute	§ 727	§ 1328(a); hardship § 1328(b)
Wait after a prior discharge	8 years from a Ch. 7; 6 from a Ch. 13	4 years from a Ch. 7; 2 from a Ch. 13
Filing fee	$338	$313

Chapter 7 in Outline: Liquidation, Timeline, and What You Keep

You file a petition, schedules, and a statement of financial affairs. A trustee identifies non-exempt property, sells it, and distributes the proceeds. In most consumer cases there is nothing to sell: the trustee looks for equity, not household goods, and exemptions decide whether equity is reachable.

The timeline. The federal judiciary's Chapter 7 guidance puts the creditors meeting 21 to 40 days after filing, with discharge "generally, 60 to 90 days after the date first set for the meeting of creditors." Note where that clock starts — from the meeting, not from filing. A straightforward Alaska case runs roughly three to four months.

Chapter 13 in Outline: The Plan, the Timeline, and What It Protects

The plan is the case. You pay a trustee monthly and the trustee distributes to creditors. Length is set by 11 U.S.C. § 1322(d) and turns on the same median comparison as the means test: below the Alaska median, three years unless the court approves longer for cause; at or above it, five, which is the ceiling either way.

What the court checks. Section 1325(a) requires good faith; that unsecured creditors receive at least their Chapter 7 liquidation value, the "best interests" test at § 1325(a)(4); that secured claims be paid, surrendered, or consented to, § 1325(a)(5); feasibility, § 1325(a)(6); current child support, § 1325(a)(8); and filed tax returns, § 1325(a)(9). One trap: the "hanging paragraph" blocks cramdown of a car bought for personal use within 910 days of filing.

Discharge comes under 11 U.S.C. § 1328(a) on completion of payments. Section 1328(b) allows a hardship discharge on narrow conditions, and under § 1328(c) it reaches no debt listed in § 523(a).

Eligibility has a ceiling. Under 11 U.S.C. § 109(e), for cases filed on or after 1 April 2025, unsecured debts must be under $526,700 and secured debts under $1,580,125. This is bankruptcy writing's most misstated figure: a single combined limit of $2,750,000 sunset on 21 June 2024, and the Code reverted to separate limits. Restoring legislation passed the Senate in August 2026 but is not law.

The Means Test Under Section 707(b) and How Alaska's Income Figures Work

The safe harbour comes first, and most people never get past it. Under 11 U.S.C. § 707(b)(7), no party in interest may even file a presumption-of-abuse motion if your current monthly income times twelve is equal to or less than the Alaska median for your household size. That bars the § 707(b)(2) presumption only — abuse can still be argued on the totality of the circumstances under § 707(b)(3).

Alaska's figures come from the United States Trustee Program and are revised periodically, so work from the live table. For cases filed on or after 15 July 2026: $85,817 for a household of one, $112,548 for two or three, $142,136 for four, adding $11,100 per person above four. The repeated two- and three-person figure is not an error — the statute points to the highest median for a family of the same number or fewer.

Above the median you deduct allowed living expenses and secured debt payments. A presumption of abuse arises under § 707(b)(2)(A)(i) if projected disposable income over five years is not less than the greater of 25 percent of nonpriority unsecured claims or $10,275, or is at least $17,150 — both effective 1 April 2025, and superseding the lower 2022 figures still quoted elsewhere. Failing the means test does not bar relief; it redirects you to Chapter 13.

Alaska Exemptions: What You Keep, and Why the Opt-Out Question Matters

Alaska gives you a choice, and that is not true everywhere. Under § 522(b) a state may bar residents from the federal list in § 522(d), and roughly two thirds have. Alaska has not: AS 09.38.055 limits which state exemptions apply in bankruptcy and says nothing about the federal list.

The court here has held squarely that Alaska has not opted out, and its published Schedule C chart states that Alaska debtors "may take either state OR federal exemptions." You pick one system whole; joint filers pick the same. Alaska's homestead exemption is $72,900 against the federal $31,575 — but the federal one doubles for joint filers under § 522(m) and Alaska's does not, and the federal scheme has a wildcard Alaska lacks entirely.

How the Alaska figures move. The statutes still print older numbers — $54,000 homestead, $3,000 vehicle, $350 weekly earnings — overridden by regulation. AS 09.38.115 directs the Alaska Department of Labor and Workforce Development to publish adjusted amounts at 8 AAC 95.030. That mechanism triggers only when the Anchorage-area consumer price index moves ten percent or more, so the amounts were last revised effective 4 April 2013 and do not track the federal cycle.

Category	Alaska exemption	Statute	Federal alternative
Principal residence	$72,900, not doubled for joint filers	AS 09.38.010	$31,575, doubles
One motor vehicle	$4,050, only if full value is $27,000 or less	AS 09.38.020(e)	$5,025, no value ceiling
Household goods, jewellery, pets	$4,050 / $1,350 / $1,350	AS 09.38.020(a),(b),(d)	$16,850 / $2,125
Tools of the trade, books	$3,780	AS 09.38.020(c)	$3,175
Retirement plans and IRAs	Unlimited	AS 09.38.017	IRAs capped at $1,711,975
Weekly net earnings	$473 per week	AS 09.38.030(a)	Not a listed exemption
Cash and liquid assets (no earnings)	$1,890 monthly; excludes the PFD	AS 09.38.030(b)	Wildcard
Commercial fishing permits	Unlimited	AS 16.43.150(g)	None
Liquor licences	Unlimited	AS 09.38.015(a)(7)	None
Permanent Fund Dividend	20 percent only	AS 43.23.140	Wildcard, up to $17,475

The Permanent Fund Dividend in Bankruptcy

The dividend is an asset, and state law protects it far less than most people assume. AS 43.23.140 exempts "20 percent of the annual permanent fund dividend" from levy, execution, garnishment, and attachment — then adds the sentence that does the damage: "No other exemption applies to a dividend." Eighty percent is reachable. Note the citation: this was formerly AS 43.23.065, and some materials still cite the old number.

Some claims ignore the exemption altogether. AS 43.23.140(b) protects no part of a dividend against, in priority order, child support, court-ordered restitution, defaulted education loans, court-ordered fines, debts owed to state agencies, unpaid rent owed a former landlord, and several others. The Department of Revenue's guidance on dividend deductions is blunt: ordinary civil judgments are capped at eighty percent, but government agencies and courts may reach all of it.

Timing drives everything. Whether a dividend is estate property under § 541 depends on your right to it on the day you filed. Applications run 1 January to 31 March and payments go out in October — the 2026 dividend was announced at $1,200, including a $200 energy relief payment. Creditors cannot levy on a year's dividend before 1 April. File in February with an application in and it is very likely estate property; file in November after the money is spent and the analysis differs.

Which is why the election matters. Because Alaska has not opted out, a debtor electing the federal system can apply the § 522(d)(5) wildcard to a dividend and shelter all of it — and the court here has noted Alaska debtors routinely do that. It has also held that a creditor who levied before the petition holds only a judicial lien, avoidable under § 522(f).

The Automatic Stay and What It Does Not Stop

What it does. The moment your petition is filed, 11 U.S.C. § 362(a) halts most collection without anyone asking a judge: calls, lawsuits, garnishment, repossession, foreclosure sales, and levies on a dividend. A creditor who keeps collecting after notice can be held liable.

What it does not do. Section 362(b) carves out a long list. Criminal prosecutions continue, as do actions to establish paternity, to establish or modify support, and proceedings about custody, visitation, or domestic violence. Licence suspension is not stayed, and some evictions proceed where the landlord holds a judgment for possession.

Repeat filings weaken it sharply. If one case was pending and dismissed within the previous year, § 362(c)(3) terminates the stay as to you and the affected debt on the thirtieth day after the new filing unless the court extends it first. If two or more were dismissed that year, § 362(c)(4) means no stay arises at all unless you move within thirty days and show good faith by clear and convincing evidence.

Debts That Survive Either Chapter

11 U.S.C. § 523(a) lists what survives: most recent taxes, (a)(1); fraud, (a)(2); unscheduled debts, (a)(3); fiduciary fraud, embezzlement, larceny, (a)(4); domestic support obligations, (a)(5); willful and malicious injury, (a)(6); government fines and criminal restitution, (a)(7); student loans absent undue hardship, (a)(8); and death or injury caused by operating a vehicle, vessel, or aircraft while intoxicated, (a)(9).

Chapter 13 discharges slightly more. Section 1328(a) excepts a shorter list, and the practical difference is § 523(a)(15) — property-settlement debts owed a former spouse under a divorce decree. Those survive Chapter 7 but can be discharged on completion of a Chapter 13 plan, though support under (a)(5) stays nondischargeable in both. If a divorce judgment is part of what is crushing you, that distinction alone can decide the chapter.

When Chapter 13 Is the Only Option

Foreclosure arrears. Chapter 7 cannot cure a default; the stay buys weeks, then the lender moves for relief and the sale proceeds. Chapter 13 lets you keep paying the mortgage while spreading arrears across the plan. Non-exempt equity works similarly: with $150,000 of equity and a $72,900 exemption, a Chapter 7 trustee has reason to sell, while Chapter 13 lets you keep the house and pay creditors what that sale would have produced.

A prior discharge. The Chapter 7 bars under § 727(a)(8) and (a)(9) run eight and six years; Chapter 13's, under § 1328(f), run four and two. If Chapter 7 is closed to you by timing, Chapter 13 often is not.

Co-signers. Chapter 7 does nothing for someone who co-signed your loan; the creditor simply pursues them. 11 U.S.C. § 1301 creates a co-debtor stay in Chapter 13 barring collection of a consumer debt from anyone else liable on it. Recent taxes and support arrears must still be paid in full, but a plan lets you pay them on a schedule under court protection — see our overview of Alaska debt relief strategies.

When Chapter 7 Is Clearly Better

When your income is below the Alaska median, your debts are mostly unsecured, you are not trying to save a house from a pending sale, and your property fits the exemptions, Chapter 7 is the better instrument. It is over in months rather than years, and does not depend on income holding steady for sixty months — which matters if your work is seasonal. It also suits someone with few assets and heavy medical debt, as in our post on a local Anchorage bankruptcy attorney.

Filing in the District of Alaska: Process and What to Expect

One court for the whole state. The United States Bankruptcy Court for the District of Alaska sits in Anchorage, in the Old Federal Building at 605 West 4th Avenue, Suite 138. Wherever you live in Alaska, your case is filed in the same district. Local rules are cited as AK LBR, amended through 1 December 2024, with Chapter 13 plans and confirmation at AK LBR 3015-1 through 3015-5.

Before you can file. Under 11 U.S.C. § 109(h) you must complete a briefing from an approved nonprofit credit counselling agency within the 180 days before filing, by telephone or online, and file the certificate with your petition. Waivers are narrow. A second course, on personal financial management, is required before discharge.

The meeting of creditors. 11 U.S.C. § 341 requires the United States trustee to convene it, and § 341(c) provides that the judge "may not preside at, and may not attend." You are under oath and questioned by the trustee — 21 to 40 days after filing in Chapter 7, 21 to 50 in Chapter 13. Alaska's geography is accommodated: where travel is impractical, you can ask the United States Trustee's office, which covers Alaska from Seattle, to permit a telephonic appearance.

Costs and trustees. Filing fees are $338 for Chapter 7 and $313 for Chapter 13 under the district's schedule effective 1 December 2023; instalments are available in any chapter, a waiver in Chapter 7 only. Fees are set under 28 U.S.C. § 1930 and change. Chapter 13 cases are run by a standing trustee listed on the Department of Justice roster.

Irregular and Seasonal Income

Alaska income does not arrive in twelve equal instalments. Fishing, processing, construction, tourism, guiding, and North Slope rotations concentrate a year's earnings into part of a year, and the means test does not accommodate that rhythm: current monthly income comes from the six full calendar months before filing. Filing in December after a strong summer looks far wealthier on paper than filing in April after a lean winter, on identical earnings.

Chapter 13 feasibility is harder still. Section 1325(a)(6) requires the court to find you can actually make the payments, and a plan assuming a fisherman earns as much in February as in July is not feasible. Plans can follow seasonal cash flow, but must be built that way deliberately.

The good news for fishing families. Commercial fishing permits are exempt without limitation under AS 16.43.150(g), and the wages of fishermen, seamen, and apprentices under AS 09.38.015(a)(6) with 46 U.S.C. § 11109(a). A limited entry permit is often a fishing family's most valuable asset, and the Alaska scheme protects it in full — which can make the state election correct even where the federal homestead looks better.

Frequently Asked Questions

Will I lose my house?

Usually not — it turns on equity, not value. Alaska's homestead exemption is $72,900 under AS 09.38.010 and is not doubled for joint filers; spouses share one, and a filer whose spouse does not join may claim only half. The federal alternative is $31,575 but does double. If equity exceeds what you can exempt, Chapter 13 is how you keep the house.

What happens to my Permanent Fund Dividend?

Only 20 percent is exempt under the Alaska system, and AS 43.23.140 says no other exemption applies to a dividend. Because Alaska permits electing the federal exemptions instead, the § 522(d)(5) wildcard can often protect one in full. Whether an unpaid dividend is estate property depends on your right to it on the filing date.

Will bankruptcy stop a foreclosure or repossession?

Filing stops both immediately under § 362(a); whether it keeps them stopped is the real question. In Chapter 7 the stay is a pause — the lender can seek relief, and for financed personal property it lapses if you have not reaffirmed or redeemed within 45 days of the first creditors meeting. In Chapter 13, a confirmed plan curing arrears saves the asset.

Do student loans get discharged?

Generally not. Section 523(a)(8) makes educational loans nondischargeable unless excepting them would impose an undue hardship on you and your dependents — a demanding standard requiring a separate adversary proceeding. Chapter 13 does not change that, though a plan can restructure everything else so the payment becomes manageable.

How long does bankruptcy stay on my credit?

The District of Alaska's own guidance says a bankruptcy generally affects a credit report for seven to ten years, and that what appears is up to the credit reporting agencies — the court has no control over it. No lawyer can promise you a particular score. The reporting period is finite, and people do rebuild.

Can I file if I filed before?

Often yes, but the periods differ. Section 727(a)(8) bars a Chapter 7 discharge where you received one in a case commenced within the preceding eight years, counted petition to petition. Section 727(a)(9) adds a six-year bar after a Chapter 13 discharge, unless the plan paid 100 percent of unsecured claims, or 70 percent as a good-faith best effort. Section 1328(f) requires four years since a Chapter 7 filing and two since a Chapter 13.

What if my income is seasonal?

It changes the timing, not your eligibility. Current monthly income comes from the six full months before filing, so the same annual income can put you above or below the Alaska median depending on when you file. Bring several years of tax returns and settlement statements to a first meeting.

Do I have to go to court?

You must attend the meeting of creditors, but it is not a court hearing and a judge is barred from attending under § 341(c). It is a brief questioning by the trustee, and a telephonic appearance can be requested where Alaska travel makes attendance impractical. Most Chapter 7 debtors never see a judge.

Talk to a BFQ Law Alaska Bankruptcy Attorney

The choice is really a set of interlocking questions: where your income sits against the Alaska median, which exemption system protects more of what you own, what your equity looks like, whether a dividend is in play and when, whether anyone co-signed, and whether you have filed before. Answer those in order and the chapter usually selects itself.

Read about our attorneys and legal team or our earlier guide to debt relief and a fresh start. Reach us through our contact page or email secretary@BFQLaw.com for a confidential consultation. Nothing here promises an outcome; no one can tell you what a filing will do without your actual numbers.