Even the hardest working people can find themselves saddled with heavy debt, due to health issues, a job loss, a divorce, or other life circumstances. In those cases, bankruptcy may provide a solution to what seems like an impossible situation. 

Chapter 7


is a form of debt relief that is often described as the "fresh start" approach. This is because:

  • Most (but not all) unsecured debts are forgiven under      Chapter 7, including credit card debt and medical bills. 
  • It allows you to keep most (if not all) of your      interest in personal and real property. 
  • Chapter 7 stops creditors from trying to collect on      your debts and stops the harassing phone calls and letters from      collectors. 

Chapter 13

Reorganizes debt, allowing you to repay a portion of your obligations, based on your ability to pay. 

With Chapter 13, if you choose to keep your assets, you may continue to pay for most of your secured debts (house, car, etc.) while paying your unsecured creditors only what you can afford based on your income, expenses and overall financial situation.

If you own a home, have more than one mortgage, and the property is worth less than you owe on the first mortgage, you may also be able to get rid of wholly unsecured junior liens such as a second mortgage, third mortgage or home equity line of credit under Chapter 13. This is known as lien stripping.