We hear about bankruptcy in the news all the time.

Chapter 7and Chapter 13 are the bankruptcy types individuals like you and me are most likely to encounter.

What Is Chapter 13 Bankruptcy?

A woman contemplates her problems while leaning on a beach volleyball net.

Aileen Perilla/The Penny Hoarder

Probably not as good as youd like.

It always seems like an uphill battle to build (and keep) a decent amount in savings.

But what if your car breaks down, or you have a sudden medical bill?

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Ask one of these companies to help… ## Is Chapter 13 Bankruptcy Better Than Chapter 7?

Chapter 7 bankruptcy is often referred to as liquidation bankruptcy.

A court-appointed trustee takes your assets and divides the funds among your creditors.

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You may be able to keep your home, although exemptions for propertyvary by state.

Chapter 7 bankruptcy is a quicker process, lasting only a few months.

During your Chapter 13 payment plan, youre not allowed to take on any new debt without court approval.

Chapter 7 is not as strict.

What Happens When You File Chapter 13?

Youll also attend this meeting to answer questions about your finances and your debt repayment plan.

Then, within 14 days of filing for bankruptcy, your repayment plan must be submitted to the court.

Attorneys fees can often be paid back over the course of the Chapter 13 payment plan.

You dont have to interact directly with the parties you owe money to.

How much will you pay?

Is Filing for Bankruptcy Right For You?

Deciding tofile for bankruptcyis a deeply personal choice and one to make after careful consideration.

For some, debt feels like an insurmountable obstacle, for which bankruptcy provides a way through.

One family The Penny Hoarder spoke with found bankruptcy to be more challenging than they originally expected.

Instead of having the freedom to make simple purchases, they felt trapped by the process.

They eventually used a large tax refund to leave bankruptcy early.

For others, theshamethat often comes with filing for bankruptcy is worth it for a fresh start.

Lisa Rowan is a senior writer at The Penny Hoarder.

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