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The two most common forms of personal bankruptcy are chapter 7 and chapter 13.
Chapter 7 bankruptcy is what many would consider a liquidation proceeding. Any asset that is not considered exempt will often be required to be surrendered to the bankruptcy trustee who will sell as an asset to use to pay the creditors. People that are considered insolvent typically do not need to surrender many assets. Any asset that is considered exempt you are allowed to keep. Our test will help you understand which assets you will likely be able to keep. Once the Chapter 7 bankruptcy is discharged (normally within 6 months from filing) your debts will be erased and you'll be able to enjoy your life again.
Chapter 13 bankruptcy is different from Chapter 7 bankruptcy because the debtor typically files a chapter 13 bankruptcy to protect an asset that is close to being repossessed (home being foreclosed, car repossession, etc.). Other reasons why people file a Chapter 13 bankruptcy is because they fail to pass the means test. Chapter 13 bankruptcies are similar to a reorganizing plan whereby the bankruptcy judge or trustee will set up a repayment plan that's normally administered between 3-5 years. The bankruptcy court has the option of re-arranging a debtor's interest rate, principle balance and payment terms. A debtor must have income to file a chapter 13. If during the chapter 13 repayment plan the debtor's income situation worsens the case can often be converted to a chapter 7 bankruptcy.