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Chapter 7 and Chapter 13 are the two main types of bankruptcy that people file for. Both allow you to obtain a discharge of debts in different ways. Chapter 7 is considered a liquidation of assets. However, no property is lost in the vast majority of cases. As a result, most Chapter 7 cases provide a discharge of debt in about 100 days from start to finish.
A Chapter 13 is a repayment plan over a term of several years. There are a number of factors that go into determining how much your monthly payment will be, but the payment should be affordable based on your budget. Remaining debts are discharged at the end of your payment plan.
Eligibility for a Chapter 7 is determined based on household income. If you don't qualify, you may have to file a Chapter 13 instead. There is also similar test under Chapter 13, which is used to determine the required term of your payment plan, as well as any minimum required payment.
Please note that the treatment of some debts vary between the two chapters. For example, some divorce settlement obligations can only be discharged in a Chapter 13. Therefore, be sure to review your goals with an experienced attorney before filing.
