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What are the types of bankruptcy?

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While there are many types (or "chapters") of bankruptcy, there are only two that apply for individuals: Chapter 7 and Chapter 13.

Chapter 7: The most common and sometimes considered 'true' bankruptcy is a Chapter 7. A Chapter 7 completely wipes out dischargable debts. With this option a person can be debt-free in as little as 3 months after the day of filing.

Chapter 13: This chapter of bankruptcy is also known as a debt restructuring plan. A Chapter 13 tends to be a better option for those with relatively high incomes or high value assets they want to protect. This option involves paying back your creditors over three to five years in what is called the Chapter 13 plan. At the end of this time, the remainder of the debt is wiped away much like in a Chapter 7.