Protecting Your Property
If you qualify for Chapter 13 bankruptcy, you may be able to keep your home and your car in exchange for a promise to repay your debt over a three- to five-year period. Be aware however, if you default on any monthly payment, you stand to lose everything you own.Wiping Out Some of Your Debt
Depending on whether your debt is classified as secured or unsecured and classified as exempt or nonexempt, each creditor's rights differ. Under Chapter 7, your assets get liquidated and each creditor gets a percentage of the proceeds. Under Chapter 13, you agree to a monthly repayment plan and you get to keep most of your personal property. In either scenario, your debts will be reduced based on whether the loan was secured or unsecured. Most people end up owing creditors much less than they owed before filing for bankruptcy.
While there are a few types of debt that won't get discharged, most of your unsecured debts can get discharged for pennies on the dollar, and you are allowed to keep some of your personal property.