Chapter 7 Bankruptcy

In Chapter 7 bankruptcy, the bankruptcy trustee cancels many (or all) of your debts. At the same time it might also sell (liquidate) some of your property to pay your creditors. Chapter 7 bankruptcy, also called "straight" or "liquidation" bankruptcy, is so named because the law is contained in Chapter 7 of the federal Bankruptcy Code. Here's an outline of Chapter 7 bankruptcy -- who can file, how the process works, and what happens to your property and debts.

Chapter 13 Bankruptcy

In Chapter 13 bankruptcy, you keep your property, but pay back all or a portion of your debts over a three- to five-year period. This is unlike Chapter 7, where most debts are cancelled but you may have to surrender some property to the bankruptcy trustee. Because you pay back at least some of your debts in Chapter 13, it is also called "reorganization" bankruptcy. Learn the basics of Chapter 13 -- who is eligible, how creditors are paid, and how the process works.