A:The goal of both Chapter 7 and Chapter 13 bankruptcy is a discharge of debts. A bankruptcy discharge means you are no longer liable for repaying the debt. The main differences are the eligibility requirements, the length of time the types of bankruptcy take, whether you need to repay some or all of your debts, and how much of your property you can keep. In Chapter 7 bankruptcy, you do not need to repay your debts, whereas in Chapter 13 bankruptcy, you will have a structured repayment plan with the bankruptcy court to repay all or a portion of your debts.
Repaying your debts in Chapter 13 occurs over a 3-to-5-year period, and you must have income sufficient to make full timely payments. You will not receive a discharge until you complete your plan. You will not lose your property in a Chapter 13 bankruptcy, if your plan is structured correctly. A Chapter 13 bankruptcy attorney will be able to structure your plan to keep the property that is important to you.
In contrast, in a Chapter 7 bankruptcy, a trustee can take your property if it is not properly exempt in your bankruptcy schedules. The Trustee will sell that property and use the funds to repay your creditors to the extent possible. Exemptions vary from state to state, but typically you can keep some or all the equity in your home, car, and personal property. Only those who pass a "means test" can file Chapter 7 bankruptcy. Assuming you pass the means test and include all your debts in your paperwork, your debts are likely to be discharged within 4 to 6 months.