Chapter 7 bankruptcy is a liquidation form of bankruptcy. That means that many debts are discharged, and the remaining liabilities are paid off with proceeds from the sale of non-exempt assets. As you can guess, Chapter 7 results in loss of property, though many assets can be saved through state exemption laws. Eligibility for Chapter 7 is based on means, so if you’re above a certain income level, you will have to file for Chapter 13.
Chapter 13 bankruptcy establishes a repayment plan, typically taking place over 3 to 5 years, during which you pay back creditors for what you can afford. Some debts are discharged, others are paid back only partially, and others are required to be paid in full. The specifics of your payment plan depend on your income and assets.
