There are two main kinds of bankruptcies for consumers and small businesses: Chapter 13 and Chapter 7.
Chapter 13 can be an effective way for people who have fallen behind on their home or vehicle to reorganize their finances and keep their property and vehicles. Generally, you make a monthly plan payment to a trustee who will make disbursements to your creditors. The law is designed to give folks a chance to get caught up on the house notes or car notes (or taxes, child support, or other bills), while reorganizing or eliminating other debts. In order to succeed, it’s important to get started with an attorney who will explain the options in a clear and straightforward manner and who will treat you with understanding and compassion.
Chapter 7 is a simpler way to obtain a “discharge” from most unsecured debt, such as credit cards, signature loans (including “payday loans”), and medical bills. Upon meeting with your attorney, you will generally know in advance whether you have too many assets, or whether you make too much income for chapter 7 to be realistic. If this option works for you, it is usually a less expensive and much shorter process.