Most personal bankruptcy filings fall under Chapter 7 or Chapter 13, and the two work very differently — one clears qualifying debts quickly, the other reorganizes them into a repayment plan. Which one you're eligible for and which one actually helps depends on your income and what you're trying to protect.
Chapter 7: liquidation, but fast
Chapter 7 discharges most unsecured debt (credit cards, medical bills, personal loans) in a matter of months, in exchange for potentially liquidating non-exempt assets to pay creditors. Most filers keep the bulk of their property because state and federal exemptions protect essentials like a primary vehicle and a portion of home equity.
Chapter 13: reorganization over time
Chapter 13 sets up a three-to-five-year repayment plan instead of liquidating assets, which makes it the more common path for people trying to catch up on a mortgage or keep property that Chapter 7 might not protect.
The means test decides more than you'd think
Chapter 7 eligibility is decided largely by a means test comparing your income to your state's median. Income above the threshold doesn't automatically disqualify you, but it does shift many filers toward Chapter 13 instead.
What doesn't go away in either chapter
Certain debts — most student loans, recent tax debt, and child support — typically survive both chapters. Understanding what a filing will and won't clear is often more important than the chapter number itself.
The paperwork is where filings get delayed
Petitions, schedules, and a statement of financial affairs all have to accurately reflect your full financial picture — incomplete or inconsistent schedules are the most common reason a filing gets flagged or delayed by the trustee.