A chapter 7 case is a liquidation. A chapter 13 case is a repayment plan.

The purpose of bankruptcy is always to try to maximize recovery for your creditors and pay them back if there is any way possible. So in a chapter 7 case, it is assumed you do not have enough of an income stream to pay anything back to creditors so instead the court looks to see if you have any assets that can be liquidated (sold) to raise money. However the law also provides for exemptions and in almost all chapter 7 cases, all your assets can be exempted from being liquidated and so nothing is ever sold to raise money. This is why a chapter 7 is often referred to as the chapter where debts are simply wiped out.

In a chapter 13 case, the debtors usually do have enough income that they can pay something back to creditors. They must file a Chapter 13 Plan with the courts which details how they will continue to pay on their debts. Most chapter 13 plans only pay back a small percentage of the debts that are owed, but at least it is something. The debtors make a payment to their bankruptcy trustee every month. Most chapter 13 plans last for three to five years.

Chapter 7 is a bankrupcty filing requesting that all the debts you are responsible for be discharged. You must list all of your assets. There's no debt limit with this type of bankruptcy filing.

The court will appoint a trusteee to sell your assets.

If your home is being included in chapter 7 bankruptcy, it will be protected from foreclosure temporarily. Unfortunately, you can still lose it. Additionally, Chapter 7 bankruptcy damages your credit rating and is irreversible because your bankruptcy petition can not be withdrawn.

Chapter 13 involves you paying off your debts with a plan within 3-5 years. This plan must be based on your income, the debt amount and your assets. Wage garnishment and foreclosure can not be brought against you when you file chapter 13 bankruptcy.

With Chapter 13 bankruptcy, you are allowed to keep your assets and property.

When your chapter 13 bankruptcy ends, you are still responsible for any unpaid debt.