The two main types of bankruptcy that consumers file or chapter 7 and chapter 13. Chapter 7 is the more common kind of Bankruptcy – also called a straight bankruptcy or liquidation bankruptcy. This kind of bankruptcy is filed if you have lower income and generally don’t have much equity in personal property or real estate. In Most chapter 7 cases that are filed today involve you keep your cars and if you have real estate most of the time you keep your home as well. You don’t necessarily lose any property in a chapter 7.
Chapter 13 bankruptcy is the kind of financial reorganization where you would pay some of your debt based on your income and ability to pay.
Debts which you are unable to pay are discharged without any payment whatsoever. Chapter 13 bankruptcy is commonly filed to stop foreclosures on real estate.
Chapter 13 gives you up to five years to catch up missed payments on houses and cars and reorganize your finances.