What is the difference between a Chapter 7 and a Chapter 13 bankruptcy?

Chapter 7 Bankruptcy Allows You to Eliminate “Unsecured” Debt

Basically, a Chapter 7 is a way for a person to eliminate their unsecured debts. What they are seeking is a fresh start, a clean slate. They want to continue to pay for certain secured debts, like their house note or their car note, but discharge or eliminate their unsecured debts like credit card bills, medical bills or signature loans.

Chapter 13 Bankruptcy Is a Way to Reorganize Debt over Time

Chapter 13 by contrast is a way for a debtor to reorganize their debts over a plan of 3 to 5 years. What that means is, you are going take the back payments on your house note, the vehicle note, any kinds of loans you have for appliances, lump those all together into a monthly plan payment and pay that out monthly over an extended period of time. That usually allows a person to keep the things that they have worked hard to get in the first place and pay it out and pay their creditors as much as they can afford.