The purpose of Chapter 13 and Chapter 7 bankruptcy is to wipe out unsecured debts from credit cards and other forms of consumer debt. The bankruptcy process may therefore help stop foreclosures, end garnishments, halt repossessions, avoid or reverse utility shut-offs, and block further debt collection phone calls, ultimatums, and threats.

Chapter 13 and Chapter 7 are two types of bankruptcy. Both Chapter 13 and Chapter 7 bankruptcy provide exemptions that may allow an individual debtor to keep certain assets, but there are a lot of variables including the opinions of bankruptcy judges, your personal circumstances, the bankruptcy laws in your locality, and the type of bankruptcy filing.

Unless you feel that your financial situation leaves you no other choice, declaring either Chapter 13 bankruptcy or Chapter 7 bankruptcy can and should be avoided if at all possible. While it’s true that the bankruptcy process may give people who can’t satisfy their consumer debts a “fresh start”, the repercussions of such a decision will keep resurfacing for years to come.

Bankruptcy can stay on your credit report for seven to 10 years. Bankruptcy, therefore, isn’t always an instant ticket out of financial distress. When possible, try repayment plan options for a period of time first, especially if you have regular income and can afford to make minimum payments to creditors.