Chapter 7 – This is the total liquidation of debt. To qualify for Chapter 7 bankruptcy, you must meet precise statutory criteria as established in the Bankruptcy Code. A complete accounting of all your income, debt, assets and property must be developed and presented to the bankruptcy tribunal. If you pass the financial tests your debt will be discharged, or if there are assets available to pay some creditors, the assets will be liquidated, some of the creditors will then be paid and the remaining debt eliminated.
Chapter 13 – Unlike the total discharge of debt in Chapter 7 of the Bankruptcy Code, Chapter 13 is a restructuring of debt with the goal of eliminating the debt over a period of time, in most cases sixty (60) months.