Bankruptcy lets you get your overwhelming debt forgiven or restructured under the protection of a federal court.
Consumers have two main options:
- Chapter 7 (liquidation): The quickest, simplest and most common type. Most unsecured debts, such as credit cards, medical debt and personal loans, are discharged, or forgiven. You may have to give up some assets, like an expensive car or jewelry, but the vast majority of filers do not.
- Chapter 13 (reorganization): You repay some or all of your debt under a court-approved plan. Debts must be under a certain level, and you must have enough income to repay them over three to five years.