Chapter 13

• A Chapter 13 bankruptcy is a type of bankruptcy used by consumers who have assets. The court looks at the income, assets and expenses of the consumer and comes up with a repayment plan. The overall debt amount is reduced and the debtor will make payments over five years. A consumer is often required to do a Chapter 13 bankruptcy if he has assets above the bankruptcy exemption amount in his state or has enough extra income that the court believes he can pay back some of his debt.
  
  

Chapter 7

• A Chapter 7 bankruptcy is considered a no-asset case and will, typically, clear all of the consumer's debt. The consumers who qualify for a Chapter 7 bankruptcy do not have assets that can be sold to pay a portion of the debt and do not have an income high enough to support repaying the creditors. Certain debts are not discharged in either a Chapter 7 or a Chapter 13 case, including child support, criminal restitution and some taxes.
  
  

Wait Time

• A consumer who has previously received a Chapter 7 bankruptcy discharge is eligible to file for Chapter 13 after only four years have passed since the Chapter 7 was discharged. A discharge is granted approximately three to four months after you file for Chapter 7 bankruptcy. (The discharge is the judge's act of approving your bankruptcy, which officially clears all of your debt.) A person who has filed a previous Chapter 7 must wait eight years to file another Chapter 7. The date a Chapter 7 is discharged is not the same as when the case was filed.
  
  

Converting Cases

• A Chapter 13 bankruptcy case sets a repayment plan for five years. A new case can be filed as soon as the first Chapter 13 is repaid. There is also more flexibility in a Chapter 13, because a Chapter 13 can be converted into a Chapter 7 if the consumer's financial situation changes. Converting a Chapter 13 bankruptcy case into a Chapter 7 bankruptcy case will eliminate all remaining debt and cease the repayment plan.