Are there different types of bankruptcy?

There are many forms or types of bankruptcy. We’re going to share the two most common types - a Chapter 7 and a Chapter 13.

 

But it’s important to know that whatever type you file, they all move forward in bankruptcy court.

 

A Chapter 7 bankruptcy helps you get rid of most debt. It is designed to give you a fresh start. But it doesn’t get rid of those “secured” debts you may have, such as homes or vehicles. You will need to decide whether to pay for or give up that property.

 

A Chapter 13 bankruptcy is a bit different. Instead of wiping out your debt, it can help you lower it, and will also put in place a plan for you to pay back the rest of the debt within 3 to 5 years.

 

There are two main reasons why you may need to file a Chapter 13 bankruptcy, instead of Chapter 7:

  1. If you have regular income and have a secured debt, such as a home mortgage, and you want to keep that property but are behind on payments, or

  2. If you make too much money to qualify for a Chapter 7

 

To figure out which type of bankruptcy is right for you, you should talk to a bankruptcy lawyer.