Chapter 7 Bankruptcy wipes out your unsecured debts such as credit cards or medical bills. It also allows you to wipe out secured debts like home loans or car loans if you surrender them at the time of the bankruptcy. Of course, many wish to keep their home and car and you can do this as long as you remain current on your payments and continue to make payments in the future.

Chapter 13 Bankruptcy is a payment plan based upon how much you can reasonably afford to pay. It also allows you to halt foreclosure proceedings or auto repossession and arranges to have back payments made through your Chapter 13 plan. Chapter 13 also stops interest or late fee charges on all of your credit cards!